When can we start another 401(k) Plan?

[Jim Chad]

I think I know the answer. But I hope I am missing something. 401(k) Plan was "cancelled last summer. The last money was rolled to an IRA on 2-3-12.

Is there any way to start a Safe Harbor 401(k) prior to 2-4-13?

[BG5150]

I don't think so. But you can start a Profit Sharing Plan with no 401(k) feature for 1/1. Then add the 401(k) and SH features on 2/4. If there is no k feature in a plan, you can add it and a SH as long as there is at least 3 months left in the plan year.

[Kevin C]

You can't start a PS plan prior to 2-4-13 either. The distributions from the old 401(k) plan can only be made if there is not an alternative defined contribution plan in existence between the termination date and 12 months after the final distribution.

1.401(k)-1(d)(4)Rules applicable to distributions upon plan termination

(i)No alternative defined contribution plan.—

A distribution may not be made under paragraph (d)(1)(iii) of this section if the employer establishes or maintains an alternative defined contribution plan. For purposes of the preceding sentence, the definition of the term "employer" contained in §1.401(k)-6 is applied as of the date of plan termination, and a plan is an alternative defined contribution plan only if it is a defined contribution plan that exists at any time during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. However, if at all times during the 24-month period beginning 12 months before the date of plan termination, fewer than 2% of the employees who were eligible under the defined contribution plan that includes the cash or deferred arrangement as of the date of plan termination are eligible under the other defined contribution plan, the other plan is not an alternative defined contribution plan. In addition, a defined contribution plan is not treated as an alternative defined contribution plan if it is an employee stock ownership plan as defined in section 4975(e)(7) or 409(a), a simplified employee pension as defined in section 408(k), a SIMPLE IRA plan as defined in section 408(p), a plan or contract that satisfies the requirements of section 403(b), or a plan that is described in section 457(b) or (f).