Partial Plan Termination?

[Dougsbpc]

Salary deferrals to a 401(k) plan are technically considered employer contributions.

Does anyone know if salary deferrals are considered employer contributions in a 401(k) plan that may have a horizontal partial plan termination?

For example, if an employer sponsors a 401(k) plan and has made substantial profit sharing contributions for years, then quit making profit sharing contributions for the past three years. Are salary deferrals considered employer contributions for purposes of determining whether a horizontal partial plan termination has happened?

[Belgarath]

I'm not quite sure I understand. At least as I understand things, a "horizontal plan termination" can occur where there is an increased possibility of reversion to the employer due to a change in formula or vesting. Since employee deferrals are 100% vested, this seems like a N/A to me. Or I guess my answer to your question would be "no."

Maybe I'm just missing what you are asking.

[JanetM]

Salary deferrals are not er contributions. The are no longer counted towards the 25% of compensation amount that is deductible.

[Mike Preston]

However, they do count towards the requirement that PS plans have substantial and recurring contributions. I would take the position that they count and that participants are not entitled to vesting unless or until either the IRS said so on audit or a participant asserted that full vesting was required due to the period of time without PS contributions. Something tells me that since they count for substantial and recurring they also count to avoid full vesting.

[Dougsbpc]

Good point Mike

Also, what if a company simply did not have profits for 3-4 years? Many 401(k) documents (including this one) state that the employer may make nonelective contributions to the trust in one or more installments out of its net profits for such year.