Welcome to Executive Benefit Plans, Inc.


Main Link Column
Select this link Retirement Plans
Select this link Strategies
Select this link Employee Benefits
Select this link Individual Benefits
Select this link Participant Info
Select this link White Papers
Select this link Consulting Service
Select this link Proposal Request
Select this link Administration
Select this link Contact
Select this link News
Select this link Blog
Select this link Home


What is the 401(k) successor plan rule?

Revised. 12/06/2014

If a 401(k) plan is terminated, a new 401(k) plan may not be established until 12 months after all the assets have been distributed from the terminated plan. A distribution of elective deferrals from a 401(k) plan may not be made if the employer establishes or maintains an alternative defined contribution plan (a/k/a "successor" plan). In the case of mergers or acquisitions, the definition of the term “employer” is applied as of the date of plan termination. A plan is an alternative defined contribution plan only if it is a defined contribution plan that exists at any time during the period between the date of plan termination and 12 months after distribution of all assets from the terminated plan.

Plans that are exceptions to the successor plan rules:
Defined benefit plans (including cash balance plans), ESOPs, SEPs, SIMPLE IRAs, 403(b) and 457(b) plans do not constitute a successor defined contribution plan.

Note: The last three plan types were added by the final 401(k) regulations issued in 2014.

With the exception of the plans listed above, the employer may not maintain any other defined contribution plan during the period between 12 months before the termination date of a 401(k) plan through 12 months after the distribution of all of the assets of the terminated plan.

The 2% Exception to the Successor Plan Rule
However, if at all times during the above period, fewer than 2% of the employees who were eligible under the 401(k) plan as of the date of plan termination are eligible under the other defined contribution plan, that plan is not an alternative defined contribution plan, and the successor plan rules would not be violated.

Topical Articles of Interest:

Funding Chart  |  Contact Us  |  Proposal Request

Information in this document is subject to change without notice. Other products and companies referred to herein are trademarks or registered trademarks of their respective companies or mark holders.

Retirement Plans

Select this link Consulting Services

Select this link Qualified Plans

   Select this link Savings Calculator

   Select this link  401k

   Select this link Safe Harbor 401k

   Select this link Roth 401k

   Select this link SIMPLE 401k

   Select this link Profit Sharing

   Select this link Money Purchase

   Select this link Defined Benefit

   Select this link Cash Balance

   Select this link Successor Plan Rule

   Select this link IRC 401(a)

   Select this link ERISA 404(c)

   Select this link Prohibitive Transactions

   Select this link Fiduciaries

   Select this link Contribution Limits

   Select this link Controlled Groups

Select this link Other Plans

   Select this link IRAs

   Select this link 419(e)

   Select this link SEPs

   Select this link SARSEPs

   Select this link SIMPLE IRA

Other Links

Select this link Tests

    Select this link ACP Test

    Select this link ADP Test

Select this link Restatements

Select this link Amendments

Select this link Mistakes

Select this link Catch-up

Select this link Funding Limits

Select this link EGTRRA Q&A

Select this link Conduit IRA

Select this link Pricing

Select this link Quote

Select this link White Papers

Select this link FAQs

Select this link Glossary


Information is provided for review and consideration only. Please consult legal and tax advisors for practical advice pertaining to your business and personal situations.

This page was last reviewed and/or updated on Friday, July 03, 2015 05:21 PM


Privacy Statement - Executive Benefit Plans, Inc. Copyright 1996 - 2015 All Rights Reserved - Legal Statement
Website Powered by UHSystems