Successor plan foolishness

[Belgarath]

Question -  Sal has a blurb about the options for elective deferrals if a successor plan exists, and I don't quite understand what he's saying. He gives option (1) as "Transfer the deferrals to the successor plan (most commonly used option)."

If a plan is terminated, participants must be given the option to have their funds distributed, either taxable or as a rollover to another plan. But a rollover is still a distribution. So what does this really mean? I'm sure I'm missing something completely obvious, and it is probably a late-week brain cramp... thanks.

[RatherBeGolfing]

1 hour ago, Belgarath said:

Sal has a blurb about the options for elective deferrals if a successor plan exists,

At what point is it appropriate to start this question with "Robert has blurb..."? ?‍♂️

Joking aside, isn't the point of the section you are referring to that if you have a successor plan you no longer have a distributable event due to plan termination?  If a successor plan exists, assets with distribution restrictions (elective deferrals and SH) are not distributable due to plan termination if a successor plan exists, while other contributions like profit sharing and non safe harbor match would be distributable even with a successor plan in place.  So any participant who does not otherwise have a distributable event, would have to have their restricted contributions transferred to the successor plan or stay in terminated plan until a there is a distributable event. 

This is assuming you have the successor plan in place at termination.  If you distribute all assets and then establish a new plan within the 12 month period following distribution, you have a big problem with the distributions you already did...

[Belgarath]

Ah, the light dawns in dark places. Thanks!

[RatherBeGolfing]

Happy to help!

 

[AMDG]

Robert has big shoes to fill, but he will do a great job!  It's never too early! 

[Belgarath]

Pardon my ignorance, but who is "Robert?" Sounds like he took over for Sal?

[David Schultz]

Robert Richter, formerly of FIS (Relius), assumed responsibility for the EOB from Sal starting the beginning of the year.  He has big shoes to fill, and the feet to fill them.

[Belgarath]

Yeah, Robert is great. Like many of us, I've dealt with him many times, attended seminars, etc... Glad to know that he has taken over for Sal. I used to worry about what would happen when Sal finally got out of this, and now I have no worries!