Mid-Year Merger of DB Plans

[ac]

How is the valuation and funding standard account handled for two plans that merge into one plan mid-year?

Any help is appreaciated!

[Guest saeissler]

One plan has a final Schedule B with a short plan year to the date of merger. The other plan, the ongoing plan, will simply have additional assets and participants on the next valuation date. In addition, if assets are not sufficient to fund the present value of all accrued benefits on a termination basis on the date of merger, a schedule per 1.414(l) will need to be maintained for 5 years, so that no participant receives lower benefits after the merger than would have been received before the merger. The records will enable the plan administrator to prioritize asset allocation if the plan terminates with insufficient assets.

[david rigby]

Check out Rev. Proc. 2000-40.

[LIBOR]

Rev. Proc. 2000-40 is very good - but at one of the recent EA meetings in Washington, there was a session that was titled something like "Funding After Mergers" - try to get a copy of that session - it supplements 2000-40 very well.

Or send me your email address and I'll send it to you.