plan to plan transfers

[Guest Iwonder]

Within a controlled group there are two companies (brother-sister companies) with separate qualifiedplans. Company-one freezes contributions to its plan, and participants are permitted to transfer their balances to Company-two, and participate in that plan.

Mr. Doe is 63 years old. He wants to transfer his account balance from the Co.-one plan to the Co.-two plan and continue to participate.

Can he do this, or would it be considered a distributable event because he is over 59.5?

[JanetM]

Is company 2 participating employer in compnay 1s plan? Are you saying employees can pick which plan to participate in? That doesn't sound right at all. I think you are saying that 1 ceased all employer and employee contributions. If that is the case, and if 2 is participating ER in 1s Plan, the answer is maybe.

You can, if plans are written for it, allow plan to plan transfer between plans when employees transfer from one employer/sponsor to another.

[Guest Iwonder]

Is company 2 participating employer in compnay 1s plan? Are you saying employees can pick which plan to participate in? That doesn't sound right at all. I think you are saying that 1 ceased all employer and employee contributions. If that is the case, and if 2 is participating ER in 1s Plan, the answer is maybe.

You can, if plans are written for it, allow plan to plan transfer between plans when employees transfer from one employer/sponsor to another.

Janet,

Actually, Co-2 is not a participating employer in the Co-1 plan (Co-1 plan does not permit any additional contributions)because Co-2 maintains its own plan. Mr. Doe has not changed employers.

Could you point me to any prohibitiing language in the regs?

[JanetM]

Better I point you to plan document. What is definition of eligible employee? Does it say someone who works for another company can contribute to the plan? Are rollovers allowed into the plan from someone not eligible to be participant.

As for the distributing plan. What is distributable event? Is there in-service withdrawal for any reason or just age?

To clarify -

Doe works for co 1 who doesn't allow contributions. Doe wants to transfer to co 2 and continue to defer funds.

Why not fund an IRA since his employer no longer can check the retirement plan box on W-2.