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Leaving PEO plan, still member of controlled group


DMcGovern

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Here's the situation - Two brothers each own 50% of Company B, their parents own 90% of Company A. Both companies are currently participating in a PEO safe harbor match 401(k) profit sharing plan. Company B wants to exit the PEO plan and transfer the assets directly to their own safe harbor match 401(k) profit sharing plan. This transferee plan would be set up exactly like the PEO plan.

Questions:

1. The ownership by the brothers was shifted to a Trust sometime during this plan year (percentages remained the same). Based on the attribution rules, I don't think this transaction would meet the criteria for change in ownership under 410(b)(6)©, correct?

2. Company B wants to do the transfer/setup before the end of this plan year. How does this affect the ability to set up the transferee plan as safe harbor, and the safe harbor in the PEO plan?

I'm not finding much guidance on the safe harbor issues, so any advise would be greatly appreciated!

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