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Spin-off of Muliple-Employer DB


Guest wolfpack
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Guest wolfpack

Situation is a overfunded multiple-employer DB plan(2 employers)where each company now wants to split off and have a seperate plan and investment pool. What special reporting requirements will there be? Is a 5310-A required? What about the PBGC? Would this be treated as two new plans receiving a transfer and therefore a final 5500 required for the multiple-employer plan and new effective dates for the spun off plans? Any guidance would be appreciated.

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Guest bswift

wolf - lots of issues are involved as you may have guessed. the pbgc will have to be notified and will likely be interested in the interest rate assumptions that you use to calculate benefits and any overfunding. i had a situation once where a db plan was being spun off and the parties thought the plan was overfunded. once the pbgc intervened, they took the position that using their assumptions, the plan was actually underfunded. You'll also have to determine whether a portion of the any overfunding will have to be spun off with the group that leaves the plan. my recollection is yes, but you'll have to check that. a new plan will have to be created for the group that leaves and each plan will have to file a 5310-A. hope that helps

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