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plan year end and extension due date for merged plan?


kwalified
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Calendar year large SH 401(Comp. A) merged with new company (Comp B) in 2016.  All assets of Comp A were transferred to B by/on 12/1/16.  Plan A has until 7/31/17 to file 5558?  I am of the opinion the correct plan year end would be 12/1/16 since that is the day the trust of Plan A went to "0"

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Your mixture of "company" and "plan" may cause some confusion.  The plan merger date is usually the relevant date.  Date of combining assets is (usually) not as important: upon the plan merger (assuming that is the correct term), the surviving plan owns the assets immediately upon plan merger.  But maybe there are other relevant facts?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Merger was effective 6/30/16.  Deferrals continued into A's trust until mid-July.  Loan payments continued into A's trust until mid-November and final transfer of assets into B's plan occurred 12/1.  An extension has NOT been filed.  Form 5558 instructions say for a short plan year "for purposes of this return/report, the short plan year ends on the date of the change in the accounting period on the date of the change in the accounting period OR on the complete distribution of assets of the plan"  If in fact the merger date of 6/30 should have been the correct plan year end, what recourse would the plan sponsor have for late filing of the extension/5500?

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The merger of companies does not result in their respective plans being merged.  That requires a separate formal action.

If two plans merge as of a given date, after that date any assets held by either plan become the assets of the merged plan without regard to whether any consolidation of investments has taken place.

So when Company A (sponsor of a large SH 401(k) plan) merged with Company B, the Company A plan and any plans maintained by Company B continued to exist as separate entities unless formal action to also merge the plans was taken.  The 5500 reporting for those plans continues as before unless they are merged, in which case 5500 reporting up to the plan merger date is required to the extent it does not coincide with the plan year ends of the merging plans.  Why wouldn't Form 5558 extensions for those filings be available?

After the merger, there is no longer a "trust of plan A".  There are only the assets of the merged plan, which should have its own trust arrangement.  That the assets that had been held by Plan A are now held where the Company B plan had held its assets, while reportable on line 4j of the Schedule H, does not itself result in a plan termination.

If there is a merger, moving money from one place to another is a mere investment change, and not an integral part of the merger.  For various reasons, the sponsor of the merged plan may choose, for an extended period of time, to maintain the prior separate investments without any consequences to the merged plan.  We are not, after all, talking about spin-offs here.

Always check with your actuary first!

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exactly, so the key date is the actual merger date as specified in corporate resolutions, plan amendments, etc., which, if it was 12/1, then regardless of when assets were consolidated the plans are deemed one on 12/1 and that is the last day for A's plan and so 7/31/2017 is your unextended 5500 filing due date and deadline for any extension. 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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