Merger of single employer 401(k) Plan into multiple employer 401(k)

[Guest pensionadmin]

We are establishing a multiple employer 401(k) plan for an association of employers. Some of the employers now have their own single employer 401(k)'s; we'll be merging them into the multiple employer plan. Question: if a single employer calendar year plan is merged into the calendar year multiple employer plan at 5/1/02, do we have to aggregate the "old" plan and the new plan for testing purposes? Or can they be tested separately?Same people will be covered in both the old and new plans.

And ideas? Thanks!

[alanm]

You have to aggregate. The worksite employer will have to adopt the multiple plan and it will be regarded as a continuation of a 401k arrangement by that worksite employer if a previous plan was in effect for that worksite employer. Each worksite is tested separately in the multiple.

[Guest pensionadmin]

Alan, thanks for your reply. Do you have any idea where I could look for something verifying this is how to handle it? It makes sense to me but won't these employers need to do a final 5500 when their individual plans merge into the multiple employer plan?What ADP/ACP testing will need to be reported on that final filing? Thanks again!

[alanm]

The situation falls under the successor plan rule Trea 1.401(k)(d) for one, that will lead you to the aggregation regs. Yes, the individual employers will have to file a final 5500 indicating a merger into the multiple. In your case, the 5500s are due 7 1/2 months after the mergers happen. Make sure the benefits as adopted in your multiple plan are the same as the former plan of the worksite employer or else you will get into anti-cutback issues.

For a complete story on the situation you are in read Derrin Watsons book "Whos the Employer"

[Guest pensionadmin]

Thanks for all of your help!