What to do with plan when self employed doctor sells practice and moves to another city.

[jkharvey]

Self employed doctor in city A sells his clients and moves his practice to another city. Dr. sponsors a 401k plan. Can the dr simply terminate the employees in city A (creates a partial plan termination) and when he moves to city B and sets up practice use this same plan with provisions for employees he hires?

[WDIK]

The self-employed doctor is presumably the entity sponsoring the plan. The entity can certainly change locations without affecting the status of the plan in general. The status of the individual participants depends on whether or not they continue working for the sponsoring entity. As you note, partial termination rules seem to apply.

[Kirk Maldonado]

Is there a partial temination issue here?

[WDIK]

I think all previous posters agree that there is.

[GBurns]

I wonder if in cases like this, the Dr can still use the same plan.

Was he really self employed or was he operating as a P.A or a DBA? Many cases that I see really are entities with a FEIN and it is this entity that sponsored the Plan not the Dr as an individual using his SS#.

Doesn't this make a difference?

Also in selling his clients, did he also sell the lease and equipment or furniture? If he did, are the old employees staying with the new purchaser in that same location?

If this is the case, Could it be that he is the terminated employee and the other employees are now working for a successor employer at the "same desk"?

[mbozek]

Self employed Dr can maintain a plan for the medical practice he reports on the Sked C regardless of where it is located because business code is the same. He has two options-pay terminated ees 100% of benefits which should not be a problem because ee contributions are 100% vested and continue plan in new city. Second he can terminate 401k plan and establish disretionary PS plan or SEP plan for his new job and rollover his account from the 401k plan into new plan. SEP is less expensive than qual plan but no loans are permitted.