Profit Sharing Contribution

[Guest mol]

Plan A is a 12-31 yearend 401(k) plan. The owner is selling the company to an unrealted party effective 10-01. I don't have the details on the type of sale or what the old owner and new owner want to do with the existing plan.

I do know that the current owner of plan A would like to make a final profit sharing contribution to the plan before he sells the company. Can the owner make a contribution to the plan if the plan has a last day and 1000 requirement?

Does the plan need to be amended to remove the accrual requirements in order to make a contribuiton? Does it matter that the plan is a new comparability profit sharing design? Any thoughts would be appreicated.

[rcline46]

Must be a lot of this going around. Exact same thing just happened with one of my clients.

Amend the plan and make the amendment state exactly what you want to happen, including hour and pay adjustments.

[Guest mol]

Would it be possible to amend the plan to make the plan year a short plan year from 01-01-2004 to 09-30-2004 and keep the accrual requirements in place and then have the seller terminate the plan effective 10-01-2004? Is it a concern that there could be two short plan years in a row if the plan terminated and the distributions were processed in the next few months following 09-30-2004? Is it allowable to have two conseccutive short plan years as long as the reason for the second short plan year is due to termination of the plan?