termination of old keogh followed by adoption of new

[Guest kprhok]

A sole owner of a small business has a Keogh which is managed by financial services company A (plan document maintained, assets held there). She wants to roll all assets from the old Keogh into an IRA and start a new Keogh with financial services company B using their prototype plan document.

Are there any material issues associated with closing down one Keogh as of 12/31/08 and beginning a new keogh in Jan 2009?

I had thought about having the old Keogh amended/restated using the new company's prototype, but wouldn't this prevent her from moving the existing assets from the old Keogh into an IRA?

Thanks for any assistance available!!

[Lou S.]

It depends.

Does the plan have in-service distribution provisions? Does she qualify for them? If so restating might be easier.

If you terminate Plan A you need to adopt all the amendment to bring it into compliance upon termination. In my experience finacial service companies don't generally do this.

If you terminate 12/31 will you distribute in 09? If yes you'll have a 5500 for the old and new plan for 2009.

If Plan A has a 401(k) feature {solo-K maybe} then you won't be able to put a 401(k) feature in to Plan B for 12 months.

If this is one person non-K is there some reason you don't just terminate and put in SEP? Does she part timers kept out by qualified plan that whould come in under SEP?

Is the existing plan a profit sahring or money purchase plan?

Are there employees involved?

[Below Ground]

"Successor Plan Rules?"

[Guest kprhok]

Thanks Lou S.

I like your idea about installing SEP IRA because we could then have both the old assets (from current Keogh) and future contribuions in a plan that offers the expanded menu of investments offered by the IRA, and without having to set up and report under a new Keogh.

Under Ground, thanks also for your reply but I didn't quite understand your comment, "Successor Plan rules?". Please clarify. I don't want to miss a key procedural or compliance issue.