Controlled Group Testing

[Guest jimmybeau]

Two employers are in one plan. Mid-year there were ownership changes and these companies are no longer considered as being a controlled group. Do I test separately based on the status at year end or do I test them together and switch with the following plan year? It will make quite a difference in the ADP refunds. I sure do appreciate any help.

Jimmy

[Jim Chad]

FWIW I think you would have a multiple employer plan as soon as the change in ownership occurs. So, I think you would test the two employers separately at year end.

I'm not at all sure about this. Does anyone else have an opinion?

[JanetM]

Unless the document kept up with changes you may have bigger issue. As jim points out, you may have multiple employer arrangement now. But unless the documents reflect this you actually had ineligible employees participating in the plan.

[Kevin C]

Does the plan have any language about what happens during the 410(b)(6)© transition period?

[fiona1]

Assuming the plan was amended mid-year to change to a multiple employer, how would the testing be done?

For part of the year they were a controlled group and for part of the year they were a multiple employer.

[dmwe]

Wouldn't the first question be whether or not the "split off" company established a new plan at that point in time with those "split off" employees participating in the new company. If that happened then the multiple employer plan issues don't exist.