Controlled Group terminates one business and reteins the other two, can the terminated employees keep money in the remaining plan?

[Guest jsample]

We have three companies that make up a controlled group. One of the companies in the controlled group has shut down. The company has fully vested those employees and provided them with distribution paperwork. Some of the terminated employees, whose account balances are over $5,000, want to leave their money in the plan. Since there is a reamining plan for the two companies, I do not think this would be a problem (other than the preference of the employer is to get these people out of the plan). I do not think the employer can force the "shut down" employees out of the plan, because there is a remaining plan. Is this correct thinking? Thank you.

[KateSmithPA]

Hey John:

I saw your post on the message boards and was talking it over with one of my managers. She found a site in Tripodi - 2002 edition - Chapter 6.160 - first paragraph.

It appears that the participants with account balances in excess of $5,000 can remain in the plan of the controlled group and cannot be forced out.

Say hi to everyone for me.

Kate

[david rigby]

Original post describes 3 companies. Not specified is whether there is more than one plan. If the "shutdown company" had its own plan, perhaps that plan is also being terminated. Assuming no plan termination, if the EE balance exceeds $5K, then the EE decides when to initiate distribution.

Warning. May be a different result if some portion of the balance is a rollover from another plan.