MERGER, CONSOLIDATION OR SUBSTITUTION??

[Guest LARRY]

EMPLOYERS WITH EXISTING PLANS WHO JOIN OTHER EMPLOYERS UNDER ONE PLAN ( NOT A MULTIPLE EMPLOYER PLAN)USUALLY MERGE OR CONSOLIDATE THEIR EXISTING PLANS UNDER THE TRANSFER OF ASSETS AND LIABILITIES RULES. BUT WHAT IF THEY INSTEAD AMEND THEIR PLANS TO SUBSTITUTE THE ONE PLAN FOR THEIR OWN. WOULD THERE BE ANY RELIEF FROM FILING AND WOULD THEY HAVE TO TERMINATE THE OLD PLAN?????

[LCARUSI]

Re: BUT WHAT IF THEY INSTEAD AMEND THEIR PLANS TO SUBSTITUTE THE ONE PLAN FOR THEIR OWN. WOULD THERE BE ANY RELIEF FROM FILING AND WOULD THEY HAVE TO TERMINATE THE OLD PLAN?????

We need an attorney here. Dave Baker where are you?

In my opinion, you probably can't do that. Or if you can, the net result would be the same as a merger of the old plan into the new Plan.

P.S. The filing requirements for a plan merger (other than a DB Plan) are straightforward. In many cases, no special filing is required.

[Dave Baker]

Larry, could you clarify the facts ... I'm not sure I understand.

You mean the stock of Company A is bought by Company B, such that now they're in a parent-subsidiary group, and A is wondering if it can keep its old plan and its trust fund intact but just not fund it any further, and then get on the Company B plan going forward?

[Guest Anne]

Are you referring to Form 5500/ERISA Disclosure requirements? Profit sharing plans can be "frozen" and future contributions made to a successor plan if the appropriate amendments/resolutions are adopted, but that doesn't end the filing requirements.

I presume the employer doesn't intend to have employees participating in both plans simultaneously (although there are circumstances where this may be desirable), and by "substituting" you mean participants will have their contributions made to the "substitute" (post-merger) plan.

If the original plan will remain in existence, and there is no intention to make contributions to it, the usual Form 5500 filing and other reporting requirements continue each year until the plan is terminated and all the assets are distributed, transferred, etc..

We need some more detail about the employers' intentions and the actual type of plans and employee groups involved to answer to your question.

[This message has been edited by Anne (edited 09-19-98).]

[Guest Anne]

We need more information.

[This message has been edited by Anne (edited 09-19-98).]