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We have a client XX that was acquired by YY in 2021, but they opted to merge the YY 401k plan into the XX plan rather than the other way around (usually the seller’s plan transfers into the buyer’s plan). The assets transferred in June 2022. As part of the merger, they changed the plan name and the plan EIN of the XX plan to the YY plan name and EIN effective 6/30/22 The issue is a final 5500 was filed for the legacy YY plan for PY 2022 (after assets transferred to XX). But that same EIN is still being used for the current merged plan. I, along with the plan auditor, suggested amending the plan number of the current merged plan to 002. The recordkeeper, however, is saying that in order to change the plan's three digit number from 001 to 002, a final 5500 needs to be filed for 001 showing assets going to zero. The "transfer out" from the XX plan and into the YY plan would be captured in Schedule H showing a "transfer" to YY-002. I understand that if a plan terminates or transfers/mergers, then a final 5500 should be prepared. But the plan did not terminate in this case. The seller's plan name and EIN were amended to match the buying company's name and EIN. I'm thinking there should be a retro amendment changing the 3 digit plan number of the current merged plan to 002. Amend the 2022 XX filing to reflect the changes of Plan Name, EIN, and plan number in line 4 of Part II. Then the Final 5500 for the legacy YY plan should be amended to have plan 002 in the 5(b)(3) box of Part IV of Compliance questions. I feel like this would be the most logical and easiest for the DOL to follow. But I've been receiving conflicting information, from ERISA counsel, on whether it's required to file a Final 5500 if you're changing a three digit plan number. But I feel like those who view it as required is just because it almost always correlates with a termination or merger. Any and all feedback is appreciated. I wasn't involved in the plans back in 2022 so trying to clean up now.

Hi! Company A is selling Division Z to Company B with the close date being mid-month. Company A will stop providing health coverage to Division Z employees mid-month at close. Company B will start providing health coverage to these employees at close (no time without coverage). However, since Division Z employees were not offered health coverage for each day of the month at Company A, there will be a reporting gap for 1094 and 1095 purposes. Likewise, for Company B. Has anyone dealt with this before? Is there a workaround here to eliminate the coverage gap, other than requesting company A keep benefits turned on through the end of the month?

Question about mergers/acquisitions and successor plan rules. Company A and Company B are a parent subsidiary controlled group and both participate in A's 401(k) plan. Company C buys the stock of Company B. Company B immediately ceases participation in the A's plan and becomes a participating employer in C's 401(k) plan. Company C refuses to accept a trustee to trustee transfer of assets and liabilities for B's employees from A's 401(k) plan, nor will C agree to a spinoff and merger on behalf of B's employees. I wouldn't think B's employees would be eligible for termination distributions from A's plan until they terminate from Company B, right? Can Company A spin off the portion of the plan that holds B's employee's balances, terminate it, and pay out the balances even though B is now a participating employer in another 401(k) plan (C's plan)?