401k Plan Mergers - Required (??) "grandfathering" of lower

[Guest Pat2]

In merging 401(k) plans with different elibility requirements aren't you required to retain ('grandfather') the previously existing eligibility/partipation rights in the receiving plan?

EXAMPLE: Plan A has 21 and any eligibility, Plan B has any age & 3 mos of service, and Plan C (the target or successor plan has 21 & 1 eligiblity). Then where in the regs are you required to allow previously eligible participants under Plans A & B to contibute under Plan C before satifying both the 21 & 1 requirements of Plan C?f

[E as in ERISA]

Because its a merger, Plan C is technically a continuation of Plan A and Plan B. It's like you amended Plan A or Plan B changing the terms to those of Plan C. Therefore anyone, who is already a participant in A or B will maintain that status. If you want to keep them out, you have to start up a new Plan C and freeze Plans A and B.

[david rigby]

... and employees of A or B who do not meet the eligibility requirements of "their" plan on the day before the merger will be subject to plan C requirements. Or the plan C sponsor could amend Plan C (temporarily or otherwise) to be more generous.

[Mike Preston]

I'm on the other side of the fence on this one. An individual in Plan A or Plan B with an account balance certainly must see that account balance retained. But just like Plan A could be amended to provide for 21/1 and eliminate deferrals for those already in the plan until those people met the new eligibility requirements, so can Plan C as the continuation of Plan A.