Term 401k plan, payout, set up another in 12 months...

[Oh so SIMPLE]

One of the alternatives that I would like to present to companies to dealing with the new fee disclosure burden is to do this:

1-Terminate k plan and process payouts (direct rollovers or lump sums, as chosen by each plan beneficiary), those that roll to IRAs will be able to direct the investment of their retirement savings, not held in IRAs rather than plan trust--no fee disclosure or other responsibilities for the company,

2-Establish new profit sharing plan without participant direction of investment, just pooled accounts over which the trustee/investment committee makes all investment decision,

3-Add 401k feature to take effect 13 months after the old k plan's termination.

Does the 12 month prohibition begin to run from the day that employees may no longer make elective deferrals or from the date that the old k plan's assets have all been rolled/paid out incident to the termination of the old k plan?

[Tom Poje]

1.401(k)-1(d)(4)

...ending 12 months after distribution of all assets from the terminated plan.

[cpc0506]

One of the alternatives that I would like to present to companies to dealing with the new fee disclosure burden is to do this:

1-Terminate k plan and process payouts (direct rollovers or lump sums, as chosen by each plan beneficiary), those that roll to IRAs will be able to direct the investment of their retirement savings, not held in IRAs rather than plan trust--no fee disclosure or other responsibilities for the company,

2-Establish new profit sharing plan without participant direction of investment, just pooled accounts over which the trustee/investment committee makes all investment decision,

3-Add 401k feature to take effect 13 months after the old k plan's termination.

Does the 12 month prohibition begin to run from the day that employees may no longer make elective deferrals or from the date that the old k plan's assets have all been rolled/paid out incident to the termination of the old k plan?

You are still going to have to disclose information the minute you allow participant direction on the 401(k) piece.

FWIW, as long as there are plan assets, there is still a plan and disclosure requirements still exist.

[Bird]

That's one way to do it but it seems extreme. Another thing to think about is to allow in-service distributions at a certain age, maybe NRA, or 59 1/2, and then those participants can effectively self-direct (by rolling over to IRAs); anyone left would either be forced into a pooled account, or you could convert to a platform that will take care of the disclosures for you.