A sole owner of a small business has a Keogh which is managed by financial services company A (plan document maintained, assets held there). She wants to roll all assets from the old Keogh into an IRA and start a new Keogh with financial services company B using their prototype plan document.

Are there any material issues associated with closing down one Keogh as of 12/31/08 and beginning a new keogh in Jan 2009?
I had thought about having the old Keogh amended/restated using the new company's prototype, but wouldn't this prevent her from moving the existing assets from the old Keogh into an IRA?

Thanks for any assistance available!!

It depends.

Does the plan have in-service distribution provisions? Does she qualify for them? If so restating might be easier.

If you terminate Plan A you need to adopt all the amendment to bring it into compliance upon termination. In my experience finacial service companies don't generally do this.

If you terminate 12/31 will you distribute in 09? If yes you'll have a 5500 for the old and new plan for 2009.

If Plan A has a 401(k) feature {solo-K maybe} then you won't be able to put a 401(k) feature in to Plan B for 12 months.

If this is one person non-K is there some reason you don't just terminate and put in SEP? Does she part timers kept out by qualified plan that whould come in under SEP?

Is the existing plan a profit sahring or money purchase plan?

Are there employees involved?

"Successor Plan Rules?"

Thanks Lou S.

I like your idea about installing SEP IRA because we could then have both the old assets (from current Keogh) and future contribuions in a plan that offers the expanded menu of investments offered by the IRA, and without having to set up and report under a new Keogh.


Under Ground, thanks also for your reply but I didn't quite understand your comment, "Successor Plan rules?". Please clarify. I don't want to miss a key procedural or compliance issue.