Coverage

[Guest Sieve]

Does the 1+-year free pass for coverage testing resuting from a merger/acquisition (IRC Section 410(b)(6)© and Treas. Reg. Section 1.410(b)-2(f)) apply to the purchase of assets--i.e., Entity X buys the assets of unrelated Entity Y, including the plan, and all Entity Y employees move over to Entity X--where there is no resulting controlled group being formed? The regs seem to indicate "Yes" (last sentence of -2(f)), but I can't get that result from the Code provisions (which require that "a person becomes, or ceases to be, a member of [a controlled group] . . .").

[KJohnson]

Yes the regs went farther than the Code in defining acquisitions and dispositions. I think asset sales are definitely covered by the regs. I think Tripodi also notes that the regs expanded on the Code.

2004-11 also says that "For purposes of § 410(b)(6)©, § 1.410(b)-2(f) provides that the terms “acquisition” and “disposition” refer to an asset or stock acquisition, merger, or other similar transaction involving a change in employer of the employees of a trade or business. "

Whether this would be subject to challenge--and who would challenge it--I guess could be interesting questions.