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Have a bit of a weird scenario here and unsure how to proceed. We are getting ready to onboard Company X, who will be offering its employees a 401k for the first time. However, Company X acquired Company Y recently in a total stock purchase. Company Y has an existing Safe Harbor plan. Our belief is that Company X is now the sponsor of that plan. Is that correct? It isn't a merger of plans because there was no plan at Company X to merge with. If Company X is in fact now the sponsor of that Company Y plan, how can we get rid of the Safe Harbor provisions (Company X did not want a Safe Harbor plan)? Are Company X's employees eligible for the plan right now if they meet the general eligibility requirements? We believe yes. Can the SECURE Act provisions around Safe Harbor be utilized here for making a midyear change? Thanks in advance for any insight or suggestions!

We are looking to acquire a TPA, but want to know more about how these are priced by looking at comparable transactions. There aren't many comps with data around profitability, and so its hard to figure out what is a good price to offer. Would anyone have direct experience with M&A in TPAs that we can speak with? Thank you.

I have one small organization, Company A, that merged with 4 other organizations for a new controlled group company NewCo effective 2/1/2020. Company A has a cash balance plan, and as of 12/31/2020, Company As cash balance plan will be terminated, and NewCo will have a CB plan for the whole CG as of 1/1/2021. Company A would like a full accrual for 2020, resulting in a 120k contribution. They are doing their 1/1-2/1 short tax year filing now, and wanted to know how to put the contribution on there if it hasn't been made yet. My thought is on the final 2020 filing, they change the plan sponsor to NewCo on Line 4, put all of the 2020 PY contributions on the SB, Company A pays all of the contributions, and NewCo allocates the deductions to them within their financials. Does that sound accurate? If they've made any contributions to date, could those be deducted on the short tax year filing? Thanks for any help!

I have 2 plans that are sponsored by the same company. They want to merge the 2 plans to make administration easier. One plan has a funding shortfall in the year before the merger and the other plan did not have a funding shortfall. Based on Rev. Proc. 2017-56, it seems like due to the fact that one plan had a shortfall and the other did not, that it does not qualify for an automatic approval. Therefore, we are requesting approval for a change in funding method. Does anyone know if this is required? As of the merger date, due to the assets in the 2nd plan, all shortfall amortizations are wiped out and the plan is over 100% funded. From what I can find in Rev. Proc. 2017-4, the user fee is $10,000. This seems excessive given the fact that one company sponsors both plans and the only reason they did not qualify for the automatic approval was the funding shortfall, which is taken care of as soon as the merger takes place.

Have two unrelated entities that are merging into a new entity (a type A or C reorg, accountants working out details). They wish to also merge their respective retirement plans. Both calendar year plans. Plan A is a safe harbor 3% QNEC, Plan B is not safe harbor and has a matching contribution. They wish to merge the Plans asap (during the year) with the new merge entity accepting sponsorship of the merged plans. And want the merge plan to be safe harbor 3%. I am trying to find guidance on how to handle - can we treat the merged plan as new and adopt SH provisions, do we have to wait until 2019, etc. Any thoughts would be greatly appreciated. Thanks.

Plan with a 3% non-elective SH wants to merge with safe-harbor plan with basic SH match. Under IRS guidance re: mid-year amendments to SH plan, you can't change the SH type mid year. Can these plans merge? Does their merger mean the plan will lose SH status for 2016 year and be subject to testing?

I have been running this pension and investment sales and administrationTPA business for 40 years, and I now want to sell. I am still full of pi.s and vinegar and want to continue in the business, but must relieve myself of being an owner and the owner responsibilities. I just want to be a rainmaker, consultant, expert witness, problem solver, etc. but I do not want the responsibility of running the business. For almost the full 40 years we have received our business as referrals from CPAs and Attorneys. Hardly any from financial sales people. We are also an RIA and receive fees for investment advising and either insurance commissions or RIA fees on most all our 401(k) business. I believe that I have developed the method to easily get business from CPA firms and Law firms. The method is easily taught to quality sales people and will generate business quite quickly. But frankly, I want to go "elephant hunting" for the larger more mature 401(k) plans rather than get the smaller cases from the CPAs and Attorneys. I have been working on a new marketing plan that is close to being ready to go, but I would like some help from a buyer of my firm. Although at one time, my firm was more than twice as large as it is now, I think the firm and myself are worth a look. I have extensive experience, am highly educated (MBA from U of Michigan), fully credentialed (Certified Pension Consultant and many more), founded a local bank that we took public onto the Nasdaq at 36 years old and on the Bank's Board for 23 years until we sold it for cash before the bank crash of 2008), am considered an innovator and am also an idea a minute kind of guy. Do you think I should use an M & A firm to find a buyer or should I try to find buyers myself. If you have any recommendations, please let me know. You may reach me at 248 342 9500 because I do not know how people communicate with each other that meet on this forum.

I'm sure the answer is out here somewhere, but I'm in sort of a hurry. Sponsor acquired another organization in a 410(b)(6)© transaction. The acquired company has a Safe Harbor Plan (QACA), and the sponsor has a regular safe harbor match plan. Is there anyway these plans can be merged mid-year? My initial reaction is "NO" because of the mid-year amendment rules around safe harbor plans, but the sponsor pushing to merge to save administrative expenses. Obviously, they'd get the benefit of the 410 transition rules for coverage purposes. Any wiggle room here?

I think I have the correct answer to this, but getting it wrong would be costly, so I'd appreciate other opinions. Is a cycle E restatement and submission for the following plan timely if complete by 1/31/16 (cycle E)? For EGTRRA, Plan X was Cycle E plan based on employer EIN. Plan X applied for and received Cycle E letter for EGTRRA. MERGER #1 In 2012, sponsor merged into another organization with EIN ending in "4". So post-change, applicable cycle is D. (Not sure of the merger date within 2012, but this shouldn't matter because neither D nor E was open or expired at any time in 2012). MERGER #2 1/1/15, sponsor merged into another organization with EIN ending in "0". Pre-change cycle is D Post-change cycle is E Unless one of the exceptions in section 11.03 of Rev. Proc. 2007-44 applies, then the post-change cycle (E) will be the applicable cycle. Consideration of 11.03 exceptions... (1) N/A Post-change cycle is not open (2) N/A Post-change cycle has not expired (3) Post-change cycle (E) ends later than the pre-change cycle (D) and and pre-change cycle (D) is open (yes), the plan is permitted to treat the pre-change cycle as the applicable cycle. This sounds optional to me - meaning there is also an option to use the post-change cycle. (4) N/A pre-change cycle is not expired (5) N/A one of the cycles is currently open I think the plan is now cycle E plan again and will be in compliance if restated by 1/31/16 in accordance with the 2014 cumulative list. We intend to file for a letter. The plan could have elected to use Cycle D, but wasn't required to. Anyone disagree? Input appreciated!

A client is considering a merger with another client. Each firm has a DB plan and each plan would be fully funded prior to the merger. After the merger, a significant minimum funding contribution would be required. The question is ‘who would be entitled to claim the deduction for that minimum funding contribution?’ Would the successor firm be entitled to deduct the contribution or would that deduction need to flow back to the pre-merger firms? It seems to me that the successor firm should get the deduction. That seems to make sense but its important to be certain and I would like to provide some documentation to support my conclusion. Is my thinking correct and could anyone suggest documentation? Is there a certain way that the merger of the firms and their plans should be structured so the successor firm would indeed be able to claim the deduction? Thanks for any help.

After reviewing prior posts, it seems as if it is no surprise when a takeover plan document is unsigned. Has anyone come across a situation in which a company acquires another company (let’s call the other company, “Target”). Target has a signed 401(k) prototype plan. Prior to sponsoring the prototype plan, Target sponsored an individually designed plan, which was never signed. The prototype vendor used the unsigned document to create the prototype and never asked for anything more. Company wants to merge Target’s 401(k) plan into its own 401(k) plan but is concerned that Target’s prior unsigned individually designed document will taint its 401(k) plan. Should we simply ignore Target’s prior unsigned document, or is this a real concern that would justify a VCP filing?

Our parent company recently purchased another company. We're testing things to see how we'll pan out with the coverage test. Some of our plans now fail the ratio test (using the entire controlled group) so we're moving to the ABT. As part of the ABPT on a stand-alone basis (no permissive aggregation yet), we need help with determining the denominator for each plan. Plan A NHCE avg benefit rate: 9% HCE avg benefit rate: 10% (1000 NHCEs and 200 HCEs) Plan B NHCE avg benefit rate: 4% HCE avg benefit rate: 4.5% (300 NHCEs and 50 HCEs) Aggregate NHCE avg benefit rate: 7.85% HCE avg benefit rate: 7.25% Are the results for Plan B 88.9% (ie 4/4.5) or as 55.2% (4/7.25)? Is the NHCE Concentration 85.7% (300/350) or 19% (300/1550)? Thanks.