Entity Ownership Change-New 415 limit ?

[JAY21]

An LLC previously sponsored a DB plan when it had 3 owners (33%-33%-33%) but then terminated the DB plan when close to maximizing their 415 limits. A few years have passed and now 2 partners bought out the 3rd partner so the LLC is owned between the 2 partners 50%-50%. They've inquired recently about sponsoring another DB plan. Does the ownership change afford them a fresh-start on the 415 limits ? (i.e., is it the same entity). Nothing about the entity has changed except the ownership percentages.

[Blinky the 3-eyed Fish]

No, the ownership change does not restart the 415 limit. It is the same entity. If they had started a new entity then I see a different story.

I can tell you if an ownership change did cause for a 415 limit restart, then there would be thousands of doctors and lawyers doing a happy dance upon each partner change.

[JAY21]

I agree it seems a little "idealistic" to get a new 415 limit. Still the ownership of these 2 entities, if they could have existed simultaneously, would not have been a Controlled Group given the Vogel Fertilizer decision that would have eliminated the partner with 0% ownership in the new entity from the Controlled Group analysis. I'm not saying controlled group criteria is the main or only criteria relevant here, just that it makes the answer less obvious to me. The fact that it's not a continuation of the same plan also muddies the water for me. I note that Sal Tripodi's book (page 5.129 of 2004 ERISA version) seems to say that the IRS hasn't provided specific guidance on the "treatment of prior employer as the same employer" and he suggests using other IRS guidance on "Severance of employment" issues as a proxy.

[rcline46]

I would think the overriding concern is if the EIN of the LLC changed. If not, then I would think it is a continuation.

A partnership actually changes to a new partnership so I've been told. I don't know if they get a new EIN.