Guest RetireFast Posted January 7, 2011 Share Posted January 7, 2011 2 Professional Service Corporations (single owner in each - ER 1 and ER 2) have formed ABC Company and have adopted ABC 401(k) Plan...1 plan/2 participating employers... ER 1 and ER 2 have split and would like to disolve ABC Company; however, ER 1 would like to continue sponsoring a 401(k) Plan while ER 2 would like to adopt a SIMPLE 401(k). Can ER 2 adopt SIMPLE 401(k) Plan in the same year...? Any other information would be helpful... Link to comment Share on other sites More sharing options...
Gary Lesser Posted January 26, 2011 Share Posted January 26, 2011 Employer 1 could adopt the plan of the ABC company and continue with the 401(k). Other changes may be needed, like designating the plan administrator. Employer 2 never had a plan; it was the plan of the ABC Company (right?) covering the employees of the 2 entities. If 50/50 ownership, it would not appear that that any of the three entities are related, controlled, or affilliated. If either partner had more than a 50% interest, then code section 415(h) would apply. If 80% or more, then there could be problems. Assuming entiries not related, then the exclusive plan rule would not apply. In some cases, service with a predesessor employer needs to be counted, see IRC 414. Keep in mind that elective limits are also applied individually (in addition to being plan limits). Link to comment Share on other sites More sharing options...
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