Termination of 401(k) plan and implementation of new plan

[nancy]

I just need some validation on the termination of a 401(k) plan. Client terminates 401(k) plan effective 3/31/00. No elective deferrals are made after that date. In my opinion, they cannot start a new 401(k) plan until 12 months after final distribution of assets of old plan, irregardless of the fact that they made no deferrals for the last 12 months. Am I correct?

If they start a new plan 4/1/01, it becomes a successor plan and no distributions can take place from the old plan.

[rcline46]

In my opinion - the PLAN terminated 3/31/00, the trust continued only to pay distributions. Without a detailed look at the regs, I think a new PLAN (401k) can be started on 4/1/01. But check the regs.

[Richard Anderson]

Nancy you are correct, for the determination of whether a plan is a "successor plan", you look 12 months from the date of final distribution of assets from the terminated 401(k) plan.

[nancy]

What do you think about starting a SIMPLE IRA in 2001 and then starting a new 401(k) in 2002 once the 12 month period has expired?