Employer has a Profit Sharing Plan and a Money Purchase Pension Plan. The owner is the only employee and participant. The owner wants to have only one plan what should he do?????

1. Terminate Money Purchase Pension Plan and rollover over to PSP.

2. Merge/Transfer the Money Purchase Pension Plan assets into the PSP.


If #2 is done will the employer have to complete a 5310-A Form before the merger/transfer of plan assets.

These plans have been in existence for some time now but with the changes made to the 415 Limits the employer wants to only have one plan.

What is the best way to accomplish his goal....

Thanks...

2 is the best option. A 5310-A is not needed as the merger meets one of the exceptions that you will find in the instructions.

BTW, this should have been done years ago.

Blinky- why option 2? Wouldn’t option be better since there would be no need to track the MPPP assets for the REA provision

While I don't see that as any hassle, I see now that the original post did mention that the owner is the only participant. With no vesting issues, then 1 is probably a little easier administratively. With 1 you have to prepare distribution forms. With 2 you have to prepare merger forms and track investments. Okay, I will go with 1 by a nose.

Go with the termination, if you terminate the MP and roll the assets into the PS plan, you leave behind those pesky spousal consent requirements

Although if that is your criterion, then you had to get spousal consent to roll over the money in the first place.

I'd do the merger. Termination is a pretty big event in my book; you have to at least consider whether an IRS filing is appropriate, and whether terminating and not filing will trigger an audit (a few years ago the IRS said they would be looking more closely at terminations that don't file, but I haven't seen any evidence of that).

J&S options are NBD, IMO.