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Spin off - Unrelated Company


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Company A sponsors a 401(k) Plan. Company B is a related participating employer. Effective August 8th, Company B will no longer be a related employer.

The 401(k) platform has recommended, that Company B be removed as a related employer and an amendment drafted to have them participate in the plan as an unrelated employer. The Platform does not want to loose the assets of Company B.

While Company A is not opposed to this recommendation, they want to be aware of any risk to the plan if they allow Company B to be a unrelated employer.

There will be no controlled group issue as of the spinoff date.

I realize Company A who sponsors the plan is responsible for any for any action of Company B that causes the plan to be "disqualified" or other actions i.e.. late deferrals,

What other issues to you find when unrelated employers participate in the plan?

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