terminating a self administered 401k plan...

[Guest Carl C]

Our employer has a self administered 401k plan in good standing, small company, about 15 participants.

Can the employer voluntarily "stop" (for lack of a better term) the self administered plan, not contract with a TPA, and tell the participants to roll over the 401k to an IRA?

Can a participant voluntarily decide to "leave" (again, for lack of a better term), the 401k plan and have his/her funds transferred to an IRA, while still being employed with the company, and the company still offering the 401k?

Carl C

[Bird]

Our employer has a self administered 401k plan in good standing, small company, about 15 participants.

With all due respect, it's not likely that such a plan is in good standing. I'm a do-it-yourselfer and understand the sentiment that "it shouldn't be so hard" but the rules in this business are positively insane. Most, if not all, plans have something wrong with them; most, if not all, "self-administered" plans have something seriously wrong with them. Sorry for the lecture.

Can the employer voluntarily "stop" (for lack of a better term) the self administered plan, not contract with a TPA, and tell the participants to roll over the 401k to an IRA?

Yes and no. The employer can terminate the plan (and should amend the plan for changes in the law that have not yet been incorporated into the plan) and would then give the participants the option of taking lump sum distributions or rollovers, as well as other options if the plan so permits, along with the appropriate notices.

Can a participant voluntarily decide to "leave" (again, for lack of a better term), the 401k plan and have his/her funds transferred to an IRA, while still being employed with the company, and the company still offering the 401k?

That depends on the plan provisions. Generally, deferral money can't come out before 59 1/2 except for hardship. The plan may or may not permit in-service distributions after that age.