Plan Conversion from MP to PS to 401(k) SH

[buckaroo]

We are converting a MP Plan to a P-S Plan as of 1/1/2005. On 4/1/2005, we are then adding a S-H 401(k) feature using the 3% NEC. We are defining compensation from the beginning of the year (rather than date participant entered the plan). Here are my questions:

Can we state that the S-H contribution starts on 1/1/2005, even though the ptps will not be able to defer until 4/1/2005?

When is the S-H notice due to the ptps?

If we start the S-H conts on 4/1/2005 and the plan is top heavy, will the employer be responsible for the T-H min conts for 1/1/2005 – 4/1/2005?

Can we make catch-ups eligible on 4/1/2005 as well?

Any help is greatly appreciated.

[Ron Snyder]

My suggestion: establish the 401(k) plan separately and then merge the PS plan into the 401(k) plan as of the 401(k) effective date. That clarifies each of the issues.

[chris]

Regarding your post:

-- you can use the full calendar year compensation for the calculation of the 3% nonelective contribution;

-- safe harbor notice due as late as 4/1/05, i.e., first date anyone is eligible, but conservative approach would be at least 30 days prior;

-- if you make the 3% nonelective contribution based on calendar year comp., top heavy probably not an issue;

-- don't see an issue with allowing catch-up's as of 4/1/05 since that is the first date participants can defer.......