gov'l plan because acquired by gov'l entity?

[EGB]

Any thoughts/authority on the following: (Carol Calhoun - I would really appreciate your comments - I have ordered the Govermental Plans Answer Book which possibly would be of help when I get it, but I need answers ASAP.)

Gov'l entity, via merger, inherits an underfunded DB plan that was originally established by a non-governmental non-profit (501©(3)) entity. Is the plan now a governmental plan for purposes of ERISA and the IRC? More particularly, does IRC 412 no longer apply following the merger such that the 412 amortization for the underfunding no longer applies?

Assuming that the plan is now governmental and that there are no state funding rules that apply, it appears that the only funding rules are the pre-ERISA IRC 401(a)(7) rules which would require 100% vesting, to the extent funded, upon plan termination or complete discontinuance of contributions (subject to the non-discrimination rules set forth therein).

Last, any thoughts/authority on the application of "to the extent funded" under pre-ERISA IRC 401(a)(7)? Surely a seriously underfunded gov'l plan cannot just be terminated to avoid the underfunding?? Maybe so, but the obvious reasons that it would not likely be done are: emplyee morale issues and the huge invitation for state lawsuits based on breach of contract, fiduciary duty, fraud . . . since preemption would not apply to a gov'l plan.