Profit Sharing Plan with rollover MP Accounts

I would appreciate any thought from the Pension Guru's out there.

Here is a little backgroud information:

I have a somewhat large Profit Sharing 401(k) Plan where everyone has individual accounts.  The Participants all have an investment account (with Advisor X)where their profit sharing and deferral contributions are deposited.  More than 50% of the Participants also have individual advisors with separate accounts at other financial institutions.  Periodically the assets are moved from the Advisor X accounts to their separate individual advisor accounts.  The Plan Sponsor is thinking of doing away with the individual advisors and forcing all Participants to house their assets under a single platform provider.  This will most likely meet with some resistance so they want to allow individuals to periodically take in-servive distributions in order to rollover their assets to an IRA with their individual advisor.   

The biggest issue with In-Service is that about 5 years ago the Plan Sponsor merged their old Money Purchase Plan into the Profit Sharing Plan.  The old Money Purchase accounts have been maintained separately from any of the Profit Sharing Accounts and we have always restricted In-Service to those age 62 and over.

Is there anyway, short of terminating the entire Plan, to get the Money Purchase Accounts out of the Plan?

Can the Profit Sharing 401(k) Plan be terminated and only allow the Profit Sharing and Deferral money sources to be rolled directly into a new 401(k) Plan?

Any ideas would be helpful.

Is there any compelling reason to remove the MP accounts prior to consolidating on a platform? They are already dealing with in-service limitations and QJSA requirements on those accounts, I would think that would become easier on a platform unless the provider cannot handle or handle differently than other portions.

Note that MP in-service can be lowered to 59 1/2 now too, if that helps.

If you really had to parse those out, I think you could spin-off those accounts into a new separate MP plan - essentially reverse the prior merger - and then terminate that plan. Participants would have to waive annuities with spousal consent, but you couldn't force that, and they could roll lump sums as desired into their IRAs or into the PSP.

Thanks CuseFan.  

The Plan Sponsor would like all the assets housed at one place.  Currently the individual accounts are with 15 plus brokerage houses.  The goal was to simplify the annual reporting process which is currently a challenge to say the least.  They would also like to appoint a Corporate Trustee rather than the current arrangement which is to name two of the Key Employees as Trustees.  We did not think that it would be possible to get a Corporate Trustee if the assets are with multiple brokerage houses and vendors.

I do like you idea of spinning off the MP accounts into a separate MP Plan and then terminating that Plan.

Dropping the In-Service Age on the MP Assets is not that helpful due to the age of most Participants.

Got it, and for sure a corporate trustee would only accept trusteeship/responsibility for those assets that it also custodied. 

Here's another thought - if you can find a corporate trustee (recordkeeper?) that also offers a brokerage window, which might also accommodate the ability to transfer existing brokerage accounts' assets in-kind. That doesn't fix the MP issue but does get all assets under one roof/responsibility for simpler admin/reporting but somewhat placates those wanting their brokerage accounts.

We are now working with a similar situation.  We are working with a platform and Schwab to get the broker account feature initiated under the platform record keeping umbrella.  It hasn't been easy so far.  Both parties seem to be pointing fingers at each other and we are in the middle.  Fortunately, there are only about a dozen broker accounts and just 2 brokerage custodians - Schwab and one other.  The other 300 participants are all on the platform.  It's an audited plan so accounting reports have to pull it all together with detail.  And the payroll upload file process is not fully automated.  Even with just these few broker accounts, the plan has become very difficult, reconciling, periodic employer contributions, check writing to the accounts, etc.  The client leadership is on board with getting it all under the record keeper and is willing to eliminate broker accounts if the transition becomes unduly difficult. About half of the account holders are 59 1/2 and can roll out. And we are considering liberalizing in-service to a much lower age for rollover or profit sharing and regular match. They (and we) are lucky the broker account option has not exploded in utilization. 

I have had the same situation and two recordkeepers refused to take the MP source.  The advisor called looking for a solution.  Look for another recordkeeper came to mind.  The spin-out to a new MP plan and then terminating the plan, and rolling the distributions into the 401k plan, although I believe that it would be a related rollover counted in the top heavy calculation, is a good idea.