Terminating Plans

[justatester]

Does a plan termination create a short plan year for testing purposes? Here is a little background:

Due to an acquistion, the plan sponsor amends the plan to terminated the 401(k) plan effective 1/31/2007. The participants are now participating in another plan. All assets of the "terminated" plan are in the process of being distributed to the participants. (They may have the option of rolling into the other plan). For 5500 purposes, they would continue to file normally until the final assets are distributed. For testing, would they run a "short" plan year test from 1/1/-1/31/2007? If this is the case are the compensation/contributions(415) prorated for the 1 month period?

Any help would be appreciated?

[J Simmons]

Yes, run a test for short, final year, 1/1-1/31/07.

Yes, prorate the compensation and benefit accrual limits.

[justatester]

That's what we thought...just confirming...Thank You!