Rollover Contribution to Frozen Plan

[Guest AEA]

Is it possible to freeze an elective deferral-only plan to future deferrals and participation, but allow employees (including new ones) to rollover contributions from other plans into the frozen plan?

I feel like I should know this, but I can't find any discussion. Thanks in advance.

[namealreadyinuse]

Yes. It depends on how the document reads. The term frozen plan really doesn't mean anything except that no contributions of any kind are being made. If you discontinued one type of contributions but allowed rollovers, it is not totally frozen, but would be frozen from the 401(k) perspective. I would worry about the substantial and recurring contribution requirement, but if the plan has been in effect for a while, there is no problem.

[ERISA25]

Yes. It depends on how the document reads. The term frozen plan really doesn't mean anything except that no contributions of any kind are being made. If you discontinued one type of contributions but allowed rollovers, it is not totally frozen, but would be frozen from the 401(k) perspective. I would worry about the substantial and recurring contribution requirement, but if the plan has been in effect for a while, there is no problem.

If a plan is frozen in that it no longer accepts contributions of any kind, then what type of notice is required to participants under a 404© participant directed account. I have read 404©(4) but that seems to fit more of a liquidation process, a mapping of the assets out of one fund into another. My concern is how do you handle current elections that are going into the fund. I suspect that you could create some type of notice asking participants to change their elections. However, what do we do with participants who do not change their elections after a notice is provided? Maybe place funds into QDIA?