Plan Spinoffs - Form 5310-A Filed But No Spinoff Takes Place

[Guest rocnrols2]

Company X maintains a 401(k) Plan. Subsidiary Y Also maintains a 401(k) plan. For valid business reasons, Company X shuts down Subsidiary Y and terminates all of its employees. The Subsidiary Y 401(k) Plan will also be terminated. A few of the subsidiary Y employees are becoming Company X employees. However, because this is not a severance from employment, these employees can neither receive distributions from the Subsidiary Y 401(k) Plan nor effect a rollover to the Company X 401(k) Plan. Instead, Company X decides that it will do a plan-to-plan transfer of the affected employees' Subsidiary Y 401(k) Plan accounts into the Company X 401(k) Plan. Company X files a Form 5310-A to notify the IRS of the spinoff. After filing the Form 5310-A, Company X is concerned that there could be compliance issues with the Subsidiary Y 401(k) Plan and decides not to allow plan-t0-plan transfers from it to the Company X 401(k) Plan. Instead, Company X decides to buy an annuity contract to guarantee the accounts of (1) those Subsidiary Y employees who become Company X employees, (2) those Subsidary Y employees whose account balances under the 401(k) Plan exceed $5,000, but who did not elect to take distributions and (3) any misising participants.

What should be done about the fact that the Form 5310-A was filed notifying the IRS of the spinoff? Should Company X a) file a corrected Form 5310-A saying that the spinoff is off, or b) do nothing?: