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401(k) merge


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Our company has now purchased two other companies. Both, including our site have 401(k) plans. It will be a controlled group situation. Can anyone share the risks and benefits of merging the three locations together under one plan? Is there a benefit other than the possibility of a reduced expense situation? Are there risks to merging these plans in a down market?

Really appreciate any helpful advice!

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Depends on fact set. If all are large plans than you would reduce audit fees. You could get lower fund fees if you assets are large enough to exceed break points.

If they are all are small and merging would make it large plan you would add audit fees and only reduce recordkeeping by small amount.

I don't think the down market would have that much impact if the fund lineups are similar, you could simply map to new line up.

JanetM CPA, MBA

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Offhand, I'd think about consolidating them with the same recordkeeper and investment elections, to get some economies of scale. But would still leave them as separate plans to keep out of the audit requirement.

You'd have to make sure that you get the coverage and ADP/ACP testing correct.

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