401k to profit sharing only

[Guest Peggy806]

No 401k deferrals have ever been made to the plan. They want to change the plan to take out the 401k provisions.

Can they make an amendment to the current plan or do you suggest that they write up a new plan document that allows for profit sharing only? I'm assuming that they don't have to terminate the 401k plan first?

Thoughts on what to do?

[Bird]

They can and should "amend" the existing plan to remove the 401(k) provision. Whether it's easier/better to just amend or "amend and restate" (i.e. the same plan but a new document) depends on the form of the existing document and who is doing the work. You don't want to "terminate" anything.

[Guest Sieve]

I agree with Bird. I wouldn't go through the termiante-001-&-adopt-002 scenario (although some see it as easier--maybe, actually, because they want to "capture" the rollovers from the terminated plan).