controlled group

[eilano]

We have a controlled group that will no longer be a controlled group effective Feb. 2005 (half of one corporation is being sold). Per Derrin Watson’s book, we can test both companies separately, but can we terminate one of the companies from the plan?

[Guest curmudgeon]

Yes, and depending on your document, you might have to remove one of them from the plan. Once your CG no longer exists, you have a multiple employer plan. Many prototype documents cannot support such an arrangement. It's easier, and more money for your company, to have one of the sponsors adopt a new plan.