New Plan After Terminated Plan

[Dougsbpc]

A small professional service employer had a DB plan for 5 years, terminated it and distributed benefits by 12/31/09.

They are now seeing the tax bite of not having the plan and want to adopt a new DB plan effective for 2010.

Is there a problem adopting a new plan within one year of terminating the prior plan?

[david rigby]

415?

[Dougsbpc]

Thanks David

They should not have a 415 problem going forward as nobody accrued more than $900/mo per year of participation and they never had a DB plan before the prior plan.

Their intention will be to have about the same level of benefits they had in the prior plan.

[Andy the Actuary]

401(a)(4) and grants of past service

[Dougsbpc]

Thanks Andy.

We will need to be careful with 401(a)(4) and past service credits. I think it will not be a problem in this case as the same employees would simply be resuming benefit accruals from the prior year.

[Andy the Actuary]

May not be quite that easy as you may need to look at all former employees as well if you grant more than 5 years of past service.