Contribution req. in year of term?

[Guest Penny17]

This is probably an old question, but I need to know whether a contribution/allocation to a money purchase pension plan is required if the plan termination date occurs mid-year and the plan terms require an employee to work at least 1,000 hours of service and be employed on the last day of the plan year in order to receive a contribution. The employee already has worked 1,000 HOS but has not completed the second requirement, last day employment, until after the plan has terminated.

Would it make a difference if the account was distributed after plan termination and prior to the last day of the plan year?

[Bird]

I don't think a contribution is required if the requirements are as you state, and the end of the plan year hasn't been reached. You have to give a notice prior to terminating.

[Blinky the 3-eyed Fish]

You can certainly make it so no contribution is required by reducing the money purchase percentage to 0% before the last day of the year in conjunction with the plan termination. That way it's crystal clear to all.