Document requirements when partnership incorporates

[SMB]

Partnership which sponsors a PS Plan is going to incorporate. Should the new "corporation" adopt its own plan prior to year-end (granting credit for eligibility and vesting for service under the partnership plan) and the partnership merge its plan into the new corporate plan - or is there a better way?

If addressed otherwhere in Message Boards please advise. Thanks to all who take the time to respond.

[Ervin Barham]

The new corporation should adopt a new adoption agreement which "continues" the plan of the partnership. Check with your plan document provider as to the specific requirements needed to complete this. This should be done as if the corporation were adopting a new plan - which means it must be completed by the last day of the plan year.

[thepensionmaven]

You will also have to be VERY careful with the 5500C/R filing.

There should be two filings for the year in question, one for the old entity to terminate it off the IRS' rolls and one for the successor organization taking over the old organizations' plan.

Box 3 gets filled out for the new plan with the old employer's information.

Box 10, I think it is, gets filled out for the old organization; and, oh yes, you have to say that the old plan has been terminated, although it technically hasn't been. It is the ONLY way to get the IRS computer to halt the EIN.

If you do not, you will be in IRS hell, and both sponsors will be amassed with IRS letters from here to kingdom come.

[richard]

Followup to Pensiondoc's response.

Can we have 1 Form 5500 filing and indicate the new plan sponsor information (name, EIN) in item 2, and fill in the prior plan sponsor information (name EIN) in item 4? (I'm looking at the 1999 5500; I don't have the item numbers for the 1998 5500 in front of me.)

I guess I have two questions. First, is the above approach proper (i.e., is one Form 5500 the correct approach)? And second, will it work (I suspect Pensiondoc has already answered this one in the negative).

Finally, does it make a difference if, in this example, it is a sole proprietorship that incorporates?