Merger of Defined Contribution Plan and a 401k Profit Sharing Plan

[Guest carolinebb]

A defined contribution plan wants to merge with a 401k profit sharing plan in which both the employer and employees can contribute. If the two plans merge, the employees will no longer be allowed to contribute. Is there any kind of prohibition on this type of merger? Thanks very much.

[ETA Consulting LLC]

No. Nothing illegal. Kind of goes against the grain as employee participant has become quite common in plan designs. A clear fact pattern on what the employer is seeking to accomplish would help, but there isn't anything to prohibit a prospective elimination of provisions allowing individuals to defer.

Good Luck!

[00hskrgrl]

A defined contribution plan wants to merge with a 401k profit sharing plan in which both the employer and employees can contribute. If the two plans merge, the employees will no longer be allowed to contribute. Is there any kind of prohibition on this type of merger? Thanks very much.

why not have the two merge with the 401(k) PS plan as the surviving plan? also, be sure the employer understands the types of plans he has. if the DC is a pension plan (money purchase, target benefit), things get a little more complicated.