terminate 401(k) and start up a new one

[thepensionmaven]

I was under the impression there is a 12 month window between the time an employer terminates a 401(k), and establishes a new 401(k).

Is there such a cite and where?

I have a heavy hitter of a broker I deal with that is telling me her checked this out, and, as long as the existing plan is terminated and everyone rolls over to an IRA before 12/31/, the employer can establish a new 401(k).

[ETA Consulting LLC]

I have many brokers who 'check things out' with other practitioners who clearly get it wrong. This goes to the definition of "Alternative Defined Contribution" plan. It's somewhere within the withdrawal restrictions regulations for Section 401(k)(2).

Edited: Looked it up: 1.401(k)-1(d)(4)(i) [[This references the section making distribution upon Plan Termination]] and suggests 12 month period from participating in an Alternative DC plan.

Good Luck!

[Belgarath]

You might commonly hear this referred to as the "successor plan" rule. Just fyi if you are internet searching or having a discussion.

[QDROphile]

I have felt many times like giving a heavy hit to a heavy hitter broker.

[Tom Poje]

good cite by ETA, and I would point out, it is 12 months after the final distribution is made, not 12 months after the termination date.

[BG5150]

good cite by ETA, and I would point out, it is 12 months after the final distribution is made, not 12 months after the termination date.

Final distribution of 401(k) money, no? If there was a trailing PS, it still goes back to the K money, doesn't it?

[Tom Poje]

well, the reg cite says

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

but there is enough space in the margin I can write in crayon (I think you have to use red crayon) if I need to change it to be something else.

at least without doing deeper research than that.

[thepensionmaven]

Successor plan vs replacement plan?

Difference?

Can the employer terminate and rollover existing plan and establish new plan eff 1/1/17 as a "qualified replacement plan."

[Tom Poje]

maybe I am missing something.

I have a 401k plan. I am going to terminate and put in a new 401k plan.

why not just amend the old plan, or switch asset providers if that is the goal?

[BG5150]

A QRP has to do with DB Plans. It's a way to mitigate the tax on reversion of assets to the ER, by placing the extra assets in a DC plan. It has nothing to do with terminating a 401(k) plan.

[Bird]

maybe I am missing something.

I have a 401k plan. I am going to terminate and put in a new 401k plan.

why not just amend the old plan, or switch asset providers if that is the goal?

Methinks that since this is being pushed by a "heavy hitter" that there is a link to "commissions" - either on the rollovers or maybe the existing investments won't be allowed under the fiduciary rule. Therefore, logic, or best practices for the plan, are not relevant to the discussion.

[MoJo]

maybe I am missing something.

I have a 401k plan. I am going to terminate and put in a new 401k plan.

why not just amend the old plan, or switch asset providers if that is the goal?

Methinks that since this is being pushed by a "heavy hitter" that there is a link to "commissions" - either on the rollovers or maybe the existing investments won't be allowed under the fiduciary rule. Therefore, logic, or best practices for the plan, are not relevant to the discussion.

Yea. We (a bundled service provide with a "commission" product that will no longer be available as of 4/10/17) are seeing a lot of "churn." I can't say I've seen a termination and replacement, but a lot of activity to get the "up front" while it can still be had....

[TPAJake]

THIS: "12 months after the final distribution is made"