Merging profit sharing plan into a separate 401(k) plan

[HarleyBabe]

So, here's the situation and I just do not have time to look up the ramifications of what the attorney is doing, considering the time of year and it's not a calendar year plan.

Have a non-calendar profit sharing, Sept. 09 year end. Have a calendar 401(k). The profit sharing plan had very large sums of money prefunded to it in order to prepare for the normal allocation they provide at year end. Here lies the problem, the company was bought out and for other reasons, they can't allocate that money and we're talking about a lot of money, 6 figures. They thought they would just pull it out, wrong. The attorney thinks it can be solved by mergining the profit sharing with an existing 401(k) (yes they were too separate plans, two docs...) and use that money to fund the match for the year.

My issue, the merge into the 401(k) is after the money was already deposited. Suggesions? The attorney also wants to 100% vest the profit sharing as of the prior plan year in order to maybe make this look a little better in the eyes of GOD aka IRS, DOL.

I have a conference call today and I need someone to help me find why this is not okay so that I have regs in front of me.

Thanks as always.

[Bird]

It might be ok. I wonder if the PS plan should be amended to accept matching contributions? I'm at least a little uncomfortable with a plan that only permits PS transferring that money out and being used for another purpose, especially since it is the last day of the year and it seems most participants still employed would have satisfied any possible PS allocation condition. Just thinking aloud for now; I know you are in a hurry for feedback.