MPP/PS Old Style Combo

[Guest PAINPA]

I thought I've seen the last of the combo Money Purchase Plan and Profit Sharing plans.... it is almost 2005...

I am consulting with a possible new client ( I might not want) whereby in 2003 they had a MPP and PS plan. The problem arises in that the TPA termed the PS plan and not the MPP plan and filed a FINAL 5500 for the PS as well.

The termed PS money was moved into IRA's as the MPP still exists and is obligated to fund for 2004. Making things more complicated, this year is not a "banner year" and the plan sponsor lost any discretionary ability keeping the MPP. I am sure it is his own fault, I am sure he signed away, terminating that plan... but come on... the TPA should have been raising flags...

What would be the best method for getting the PS back and the MPP out?

Any thoughts... posible pitfalls?

[david rigby]

Only a few thoughts from here. Probably a lot of pitfalls.

- If the PS plan was terminated and distributed, can't "get it back." Sponsor may be able to create a new one, prospective.

- Before assuming the MPP plan is a 2004 problem, check plan provisions to see if it can be amended prior to yearend. Maybe even merged into the new PS plan.

Just a hunch, but I'll bet there are "facts not yet in evidence" especially why the PS plan was terminated.

[Blinky the 3-eyed Fish]

You can always just amend the MP plan to be a PS plan instead of creating a new PS plan. As pax touched on, if there is an hours requirement or better yet, a last day requirement to accrue the contribution, well then people might not have earned the right to the contribution. If that's the case, then amending the plan now to a PS plan would alleviate the 2004 contribution requirement.