Citation needed

[thepensionmaven]

Need citation for new plan effective prior to date of incorporation.

[GBurns]

I do not think that you will find any.

In general, there is nothing that can exist or be done prior to date of incorporation simply because the entity did not exist and there was no one with authority to adopt etc. There might be some actions possible if it was a conversion from a sole prop but only if the sole prop was eligible to have such a plan, which is doubtful.

[thepensionmaven]

I seem to remember something in the Pension Answer Book, but might be mistaken.

[Gadgetfreak]

I asked the same question to TAG a few months ago and got the following answer:

Yes; the effective date of the plan can precede the establishment of the employer.

From the 1997 Annual ASPPA Conference:

ASPPA: A second question is if it is permissible to have a plan’s effective date precede the existence of the plan sponsor or a predecessor entity of the plan sponsor. Thus, if we have a brand new entity set up on 3/1/97 with a calendar year fiscal year, can we establish a PS plan with an effective date of 1/1/97, have a full 12 month plan year, and use all compensation paid during that 12 month period (which would be limited by the fact that there is no payroll prior to 3/1), and not need to pro-rate any of the regular limits?

IRS: It seems reasonable that with proper attention to the details of the plan design (including effective dates and plan years as outlined above), the issues that are of concern in this question can be avoided. We know of nothing that prohibits provisions such as outlined above.

[My 2 cents]

I asked the same question to TAG a few months ago and got the following answer:

Yes; the effective date of the plan can precede the establishment of the employer.

From the 1997 Annual ASPPA Conference:

ASPPA: A second question is if it is permissible to have a plan’s effective date precede the existence of the plan sponsor or a predecessor entity of the plan sponsor. Thus, if we have a brand new entity set up on 3/1/97 with a calendar year fiscal year, can we establish a PS plan with an effective date of 1/1/97, have a full 12 month plan year, and use all compensation paid during that 12 month period (which would be limited by the fact that there is no payroll prior to 3/1), and not need to pro-rate any of the regular limits?

IRS: It seems reasonable that with proper attention to the details of the plan design (including effective dates and plan years as outlined above), the issues that are of concern in this question can be avoided. We know of nothing that prohibits provisions such as outlined above.

The ASPPA question is focused on a 1/1 plan effective date when the entity is established a bit later in the same year. It would probably be no good to establish the plan in one year and then set up the sponsor early in the next year.

[Gadgetfreak]

I agree. But I didn't think that was the original question (i.e. different years).