We have a physician group "A" that split into two groups B and C effective January 1, 2017. They continued to maintain the existing 401(k) plan for 2017 to date. They will each adopt their own plan effective January 1, 2018. In my mind this will be handled as a spin off from Plan A with the assets transferred to B and C. The participants would not have incurred a severance of employment.
The national retirement plan Company who currently has the A plan is holding firm that the participants will have to elect distribution. Their basis I think is that Plan A is terminating.
Seems simple enough to me that Plans B and C represent successor employers and the retirement plans are replacement plans and would not allow for distributions.
Any thoughts would be appreciated.