Is this a successor plan?

[Guest JGodsoe]

Subsidiary A (which is in the process of winding down its operations) maintains a 401(k) plan that it intends to terminate 6/30/04. As of 6/30/03 the Plan had approximately 150 active participants. Due to a cutback in workforce, as of 1/1/04 the Plan had approximately 5 active participants. In January, 2 of the 5 transferred employment to Subsidiary B, and began to participate in Sub B's 401(k) plan. By June, there were only 2 employees left at Sub A- and both of them will be transferred to Subsidiary B, and will participate in B's 401(k) plan, by 6/15. As of 6/30/04, the Plan's termination date, there will be no employees left at Sub A.

Is Plan B a successor Plan?

When is the 2% threshold measured? If read literally under the regs., it is measured based upon based upon eligible employees as of the date of the plan's termination. In this scenario, there are no eligible employees as of the date of plan termination.

If not measured as of the date of plan termination, at what earlier point? In total (based upon participants over the last 12 months) 4 of the 150 participants are participating in Sub B's plan, which is 2% or greater. Does this fact make it a successor plan?

Thanks for any help.