Terminating Money Purchase Plan - Starting new 401k Plan

A potential client currently has a money purchase plan. They want to start up a new 401k plan. They plan on terminating the money purchase plan. Can the participants choose to roll over their MPP money into the new 401k plan? Or can they only roll it into an IRA?

They can roll it into the 401(k), into an IRA, or take it, pay their taxes, and throw an office party.  

you could simply convert the money purchase into a profit sharing (401k is a type of profit sharing)

one such discussion from the IRS is here (discusses whether or not accounts become 100% vested)

of course you retain the annuity option attached to the mp balances.

convert mp to ps.pdf

LOL...thank you. So the employees still have the choice of rolling it into the new 401k plan even though the MPP has the QJSA? Does the QJSA not matter because the plan is terminating?

We thought about merging it but the client wants to terminate it instead.

The QJSA does matter.  You have to get the waiver and spousal consent to make the distribution out of the plan.   Once the waiver and spousal consent are obtained, and the rollover is finished, then that money is subject to the terms of the new 401(k) plan.     

Exactly, it's like a DB plan - the normal form of distribution is an annuity - life (single) or joint (married - which must be waived with spousal consent, if applicable, in order to elect a lump sum, which may be rolled or taken as cash as previously noted. Merging, shifts that responsibility to the 401k plan for transferred balances.