Application of the transition rule?

[Guest MikeD]

I am currently working on a situation and need some input. Here are the facts:

Employer A owns 50% of a surgery center (the other 50% is owned by a third party). There is an ASG between the surgery center and Employer A. During the year, the surgery center was sold to another entity, effectively ending the ASG. All employees of the surgery center are now employees of the new owner. Almost all of the surgery center employees had more than 500, but less than 1,000 hours of service. The plan contains a 1000 hour/last day requirement for profit sharing contributions.

I am trying to determine if the 410(b)(6)© transition rule would kick in and allow me to ignore the surgery center employees in coverage testing for this year (and, then, exclude them from the cross-test for the year).

Any thoughts or suggestions?

[Belgarath]

Yes, I believe the 410(b)(6)© provisions allow you to exclude the surgery center employees for coverage testing purposes.