Cpntrolled group for only part of plan year

[Guest LMalone]

Company A and Company B are members of a controlled group. Company A sponsors a calendar year 401(k) plan, and Company B is a participating employer.

On April 30, stock ownership changes and Company B is no longer part of the controlled group. Company B wants to start its own plan effective May 1 and spin out of A's plan.

How is company A's plan tested? May we use 1563(B) -- since B was in the controlled group for fewer days that it was out of the controlled group, A and B are tested separately for the entire year when the 12/31 testing is done.

Any practical solutions? Thanks.