Alternative Defined Contribution Plan Rule

[Guest anne1]

Is there anything that would prohibit an employer from, in the middle of the year, freezing their 401(k) plan, starting up a new safe harbor 401(k) plan and then merging the assets from the first plan into the safe harbor plan? Does this violate the alternative DC plan rule if I am not paying distributions from the first plan?

[WDIK]

I do not believe that you can establish a "new" 401(k) plan with safe harbor provisions if it will be treated as a successor plan to a prior 401(k) plan. If it would cover 50% or more of the employees who were participants in the prior plan, it will be considered a successor plan.

[Guest Pensions in Paradise]

As always, WDIK is correct. See §1.401(k)-3(e)(2)