valid reason to stop this plan

[wsp]

Can anyone provide me a valid reason for an attorney nearing retirement age (4 years left or so) with two young attorneys and 3 admin staff members who are all participating in the plan would want to terminate a SARSEP? Said attorney has said he's fairly comfortable where he's at in the retirement plan picture and isn't looking to maximize his contributions and isn't even fully funding the SEP portion.

My first thought was coverage but it's a small firm and turnover is non-existant. Two of last three hires have been the attorneys and they likely won't be hiring any more soon. I'm thinking that short term this plan is pretty darn good.

What about after retirement...When two attorney's are expected to take over the firm. Plan only continues if it's a stock purchase and not an asset purchase, correct?

thoughts?

[Guest Pensions in Paradise]

Well, the most important (and valid) reason I can think of is because the plan sponsor wants to. IMHO you don't need a reason beyond that.

[wsp]

Well, the most important (and valid) reason I can think of is because the plan sponsor wants to. IMHO you don't need a reason beyond that.

Actually he doesn't want to (or not want to) terminate. He came to me looking to see if his plan was compliant and if there was a need to change it. He has no opinion either way which is surprising considering he's an Attorney. The compliance is easy....

I'm inclined to say leave it as it is since he doesn't care about maximizing...just wanted to get other's thoughts. I'm the only TPA in an office of CPA's and this is my only outlet to bounce queries off of. And since my last SARSEP terminated about 4 years ago, my exposure to this type of plan is limited.

[Jim Norman]

Reasons to keep:

- Can't set up a new one,

- inexpensive

- if employees like it, good benefit

- with no turnover, vesting not an issue.

- Compliance - I've never yet encountered a compliant SARSEP, but maybe this is the one exception. But even if not, no worries, compliance enforcement is nonexistent.

Reason to terminates

- no one wants to contribute.

- if TH or deemed TH, firm does not want to make minimum contribution.