Combined Plan with Multiple Contribution Formulas

[Guest Ralph]

Company A purchases Company B & Company C. Both purchases are stock sales. All three companies currently maintain 401(k) plans.

My understanding is that by virtue of the purchases being stock sales, Company A now has responsibility for acquired companys' plans. It doesn't seem like there is a distributable event & , therefore, Company's A's options are limited to:

1)Merging the plans

2)Maintaining plans Separately

3)Freezing the Plans (when would this be advantageous?)

Company A would like to merge all three plans together but wants varying employer contributions. If "merged plan" allows for varying profit sharing contributions by employer, I believe they will need to do rate group testing under 401(a)(4). If, however, Company A elects to maintain plans separatetly I believe they will still need to do the rate group test based on the entire controlled group. In effect, from a discrimination testing perspective it doesn't matter if they merge the plans or not.

What if Company A decides they also want varying matches by employer? Would this be subject to the 401(a)(4) test or just the ACP test? If just the ACP test, how would that work.....since you only look at eligible employees? Would you do an ACP test for each participating employer?

Any comments or suggestions would be helpful.