OK to terminate calendar year plan as of today (10/1/03)?

[chris]

Plan year is calendar year. Haven't seen the document but even assuming there is no last day/1,000 hour requirement on the match couldn't the employer execute a consent to terminate the plan effective 10/01/03 thereby cutting off e/ee deferrals for October as well as any match? E/er is selling all assets in a transaction effective 11/01/03 and wants to shut down the 401(k) as soon as possible....

[austin3515]

You can always terminate the Plan, just not retroactively. (I suppose unless there are no withholdings from 10/1 until the day the resolution/ammendment is effective.)

But the match from the first nine months is already accrued so you can't eliminate that.

Don't forget all employer contriubitons are 100% vested if terminated.

[david rigby]

Don't forget that a plan freeze may be a viable alternative. Might be possible to save some administrative fees associated with plan termination if the buyer and seller consider a plan merger, or some similar event.

The Seller did consult attorney on this point, right?

[chris]

Buyer doesn't have a plan and didn't want to assume sponsorship of this one. Thus, termination.....