Merging a MP into a PSP for 2003, 204(h) & Gust

[Guest Chris May]

I want to merge a MP into a PSP for 2003. If I do a 204(h) at the end of the year that means I can merge into a PSP on January 15th, right? If so, should my GUST effective date be January 15, 2003, and I would not have to restate the MP?

[Mike Preston]

1/15 looks ok to me. If you do this, the surviving plan will have its own GUST date, not one that is based on 1/15/03. What would the GUST date be for the PSP if you didn't merge the MP into it? Why would that change?

[Guest Chris May]

If I did not merge the plans then I'd make the effective date be 1/1/03. Since I need to give 15 days notice to the merger I have to make the effective date be 15 days later (I think).

Q: Since the MP accrual is T > 500 hours, will anyone have a MP accrual for 15 days of the year?

[Mike Preston]

Won't that make the provisions applicable to the plan you are merging into a bit late? I'm not sure that any pre-approved document has perfect language to handle merged plans. You might want to consider identifying special effective dates in the resolutions adopting the amendment and restatement, or in the merger document, or both. It depends on the language of your pre-approved document as to how you word things, of course.

As to the accrual, I think it depends on plan language and compensation paid through date of freeze. If no compensation has been paid, I don't think it makes a whole lot of difference, does it? If some compensation has been paid then you have to decide whether the formula applies to the individuals in question (that is, the active folks - as I believe the terminated folks would not have 500 hours by 1/15/2003!). If you don't have an hours requiremetn or an end of year employment requirement, and compensation has been paid, I think there are 411d6 issues you have to deal with.