We are getting conflicting information. There is an adopting employer of a multiple employer plan with a plan year of 01/01-12/31. The adopting employer has elected a safe harbor match for 2004, and now wants to un-adopt the multiple employer plan and begin a new single employer plan effective 07/01/2004.

The question is -- can the employer keep the safe harbor matching provision for the short plan year in the single employer plan and have, in effect, safe harbor matching contributions for all participants throughout 2004 in two different plans? There would be no overlap in deferral contributions. The deferrals and match in the mulitiple employer plan would cease before deferral and matching contributions in the single employer plan begin.

If they cannot convert a safe harbor adoption in the multiple employer plan to a safe harbor single employer plan, why not? It seems that the continuation of the safe harbor provisions are a benefit to the plan participants.

Thanks!

Rather than create a new plan, just spin-off the plan from the multiple employer plan. You need a separate plan document, but by structuring it as a spin-off you can see that what you want to do is permissible. It's the same plan with respect to that employer for the entire year - it's just that two different documents were used for each half of the year.

How do I spin-off? Show a transfer in of assets in the new plan? If so, wouldn't my beginning balance still be zero on the 5500?

Thanks!