Change in ownership

[52626]

Corporation maintains a 401(k) Plan.

The Plan Sponsor called and stated they were going to terminate the 401(k) Plan..

They set up an LLC and this new company would sponsor a plan.

Plan Sponsor is fixed on terminating the plan and setting up a new plan. Not sure why they will not have the LLC adotp the plan, but that is not an option.

Terminating the plan and then starting up a new plan under the LLC just seems "fishy" and screams something is wrong with this picture.

Are there any issues here???

[Bird]

Are there any issues here???

Lack of experience and incompetence. Who is making these decisions and who is in a position to say "you cannot do that?"

[52626]

I do not know the thinking behind terminating the plan instead of the new LLC adotping the plan. Client is very vague.

Assume they are set on terminating the plna and then having the new LLC set up a new plan, any issues with this. While not a "spin off" it just seems as of there would be an issue terminating one 401(k) and startng up another. The owners are the same, just an LLC vs a Corporation

[Tom Poje]

without knowing the exact details, it sounds like nothing has really 'changed' which could mean the new plan would be considered a successor plan - thus nullifying any possible distributions from the old plan. (But there is nothing wrong with having a second 401k plan)