Private Sector Employees become Public Employees

[Guest redoakwood]

I represent a municipal general employees' DB pension plan. The city intends to take over the water service division of a private utility which also has a qualified plan. All water service employees will become city employees and, therefore , will become members of the city's plan. The city wants to give the 10 new employees full service credit for vesting and benefit calculation for their private sector service. Several of the water employees are vested in the private plan, the others are not. What would be the best method to accomplish the city's goal?

[MGB]

The easiest is to merge the assets and liabilities from the private qualified plan into the governmental plan and provide service under the governmental plan for the prior employment. Very recently (in the last few weeks or couple of months?) there was a private letter ruling where this exact thing occurred (I think it was a hospital being taken over by the government) and they ruled it did not violate the governmental plan from maintaining its governmental status.

[IRC401]

Question: Wouldn't the private plan need to be amended to be brought up to date for all law changes applicable to private plans as of the date of merger (something that governmental employers are not naturally inclined to pay attention to)?