PS plan terminated; can its funds be transferred to same employer's DB plan without distribution election forms?

[dmb]

We have a profit sharing plan that terminated 12/31/01. Same employer adopted a new DB plan effective 1/1/01. Can the PS money be transferred to DB plan as a plan to plan transfer without distribution election forms?? Thanks.

[mbozek]

This may be obivious but what does the plan say? Qualified plans usually provide for a distribution of assets to participants upon termination of the plan. I dont know whether an employer can transfer assets to another qualfied plan upon termination instead of distributing assets to the participants. IRS termination guidelines permit distribution in the form of an annuity or single sum.

[Theresa Lynn]

I also would think there are some problems in going to a plan that imposes annuities. I would expect that most if not all of the participants would balk at suddenly having their benefits subject to the annuity rules. Most plan mergers and transfers go the opposite direction, where you can separately account for the benefits. I don't see any way to allocate or separate the before and after benefits. Plus, it would raise a lot of valuation problems--how do you value the account balance that now has been converted to an accrued benefit and protect the vested benefit?

I don't see any way to do a plan-to-plan transfer, versus distributions and rollovers.

[Mike Preston]

As mbozek said, in not so many words, you can close the barn door now.