Conversion Plans Adding 401(k)/(m) Provisions

[Guest Lizzie]

Appreciate anyone's specific thoughts, with 1.401(k) regulatory cites, on the following scenario: Existing Plan with Employer Contributions (profit sharing) converts to add 401(k) and match features; PYE is 3/31/2000; employees attend enrollment meetings/execute deferral agreements with the employer to have deductions taken effective November 01, 1999; plan document signed to add (k) and match features in January, 2000. Are these elective deferrals and/or match contributions valid? Can they remain in the Plan or do they have to be returned to the Participants? Please provide cites for your position, either way. Thank you.

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[KJohnson]

1.401(k)-1(a)(3)(B)(ii)...

"Further, a cash or deferred election can only be made with respect to amounts that would (but for the cash or deferred election) become currently available after the later of the date on which the employer adopts the cash or deferred arrangement or the date on which the arrangement becomes first effective."