Merging two plans

[Guest cascigm]

A client has a 401k plan (001)and a separate ps plan (002). Would I effectively merge plan 001 into 002 via an amendment. we have determined that we do not need to file a 5310.

[Dave Baker]

That's the way I've always done it -- an amendment to the plan you wanna get rid of, which says that as of 1/1/99 the terms of this plan are amended to be those of the other plan, and then the trustee assigns all of the plan's assets and liabilities pursuant to another instrument, which the trustee of the other plan accepts in writing on that instrument.

Watch out for cutback problems, of course (taking away benefit options).

[Guest ESOPwizard]

WARNING: There is no such thing as a merger for 5500 purposes. The DoL treats one plan as being terminated. Therefore, if you merge as of 1/1 (as opposed to 12/31), the DoL expects to see a 5500 for 1/1 (a one-day plan year).

We recently filed a 5500 showing a plan merger (final plan year and no end of year assets), and the IRS (computer) wanted to know why we hadn't indicated that all assets were distributed. (They were transferred or merged.)

I don't make up the rules.