Split of a PS plan into components

[SRP]

What are your thoughts on the following scenario:

1 - A Money Purchase and a Profit Sharing Plan merged but kept the sources of money separate;

2 - the new plan did not continue with ongoing money purchase contributions (only Profit Sharing);

3 - company now wants to split the plan to separate out the old money purchase plan assets;

Can the existing PS plan be split in a manner where the MPPP assets are separated out into a PS plan of its own?

The purpose is the client wants to eliminate the MPPP assets (i.e. avoid J&S requirements on that money type) by ultimate termination of a PS plan that only holds the MPPP assets subject to J&S.

[J Simmons]

Is the employer finding that providing the QJSA notice and requiring the former employee (with spousal consent) to opt for a lump sum all that difficult to deal with that they'd go to all that trouble?

For that very small number that might opt for the QJSA or not elect out of it, just use their benefits to buy a commercial annuity with the QJSA rules built in and then distribute the annuity contract to the former employee.

Doesn't seem all that onerous, particularly when they'd have to go through this process all at once when terminating the spin-off anyway.

[Guest Kabert]

I agree with John. The spinoff to form a new plan (with plan docs, SPDs, 5500s, forms, insurance, QDRO procedures, etc.) seems way too complicated than it's worth. Why not just move all the MPP-related provisions to an appendix in the plan and an appendix in the SPD?

If you plan to spin off the MPP portion and then soon thereafter terminate it, I would think through possible qualification issues (for both the old plan and the new plan). Even if you did the transaction, you wouldn't be able to eliminate the J&S annuity option with respect to the MPP money, whether before or after plan termination.