I currently have a profit sharing plan for my partnership (plan sequence #1) and would like to add an individual 401k. It is a prototype plan from from a brokerage firm. The 401k and the profit sharing plan will have to be terminated after this year due to a change in business entity.

I've been told that the 401k paperwork should submitted as a restatement of the profit sharing plan and the plan sequence number should be #2.

Does this make sense? Why would the sequence number change if the 401k is a restatment?

Or should the adoption agreement indicate that this is an initial adoption for the 401k and have a new plan sequence number?

Thank you for your help.

It sounds like you can just change the name of the sponsoring employer and plan name to reflect your new entity, use the new EIN if applicable, and amend the profit sharing plan to a 401k plan. You would continue to use Plan #001 in that case, it would be a restatement as you mention.

Just add the 401(k) feature to your existing plan. Plan would have to be amended prior to 1/1/05 for K feature to be available for 2005.

Why go to extra time and expense of new plan. Just expand the one you have.

Previously, your employer sponsored a profit sharing plan. Now, you have a profit sharing plan with the addition of a 401(k) provision. Regardless of whether you amend or rewrite your existing plan document, you continue to use the same plan number.

Use the same plan number when restating. This is one of the more inappropriately applied plan specs. used by financial advisors - they use a new sequence number when they should not.

Technically, if you use a new sequence number you have another plan (and another document and another form 5500 etc.)