Merged DB Plans

[Guest HarveyC]

A small DB plan with frozen benefits has been merged with a larger DB plan as of 7/1/2001. Both plans have calendar plan years. Are my following assumptions correct regarding the 2001 Form 5500 for these plans?

(1) The smaller plan will file a final form 5500 for a 6-month plan year.

(2) The larger surviving plan will file a form 5500 as if the plans were merged on 1/1/2001. In other words, the Schedule B will show 1/1/2001 amounts that are inclusive of the merged plan so that all amounts projected to 12/31/2001 include the merged plan.

Thanks in advance.

[mming]

The smaller plan will need a final return. As for the surviving plan's 5500, showing the transfer occuring during the year on the appropriate Financial Information schedule would seem the better way to go instead of showing the other plan's assets already being there on 1/1.

If the plan has an EOY val date, I would expect all figures on the B to take into account both plans' benefits, including the RPA CL discounted to the BOY. The opposite would then be true if the val date was BOY, i.e., only the surviving plan's benefits would be reflected throughout the B.

[RCK]

Just to emphasize what you already know, the 5500 for the smaller plan was due 1/31/3002 (7 months after the merger date).

RCK

[Guest HarveyC]

Thanks for the responses. The instructions for filing for short plan years state that they are due by the last day of the 7th month after the short plan year ends. It also states that the short plan year ends upon complete distribution of assets. So if the merger was 7/1/2001 and the assets were transferred that same month, would the due date be 2/28/2002?

[RCK]

Oops -- you're right. If the merger date is actually 7/1/01, the filing deadline is 2/28/02. And if the merger date had been 6/30/2001 the filing date would be 1/31/2002.

RCK

[Guest HarveyC]

Thanks!

[MGB]

mming,

I do not think your comments on the beginning of year valuation matches with the requirements of Rev. Proc. 2000-40. The B for the ongoing plan must include pieces from both plans. See sections 4.07 and 4.08.