Adopting employer wants out

[Santo Gold]

Company A sponsors a 401(k) Plan. Company B is an adopting employer of this plan.

Now, Company B wants to stop participating in the plan permanently.

If they do drop out, are the Company B participants entitled to take distribution of their account balances? The plan is not being terminated, so probably not. But the Company B will no longer be an adopting employer: does that mean their participant account balances have to stay there?

For a twist, what if its Company A that wants to get out? Do we have to re-do the document, showing Company B now as the plan sponsor, plan administrator, etc?

Thanks

[WDIK]

Perhaps a partial termination has ocurred?

In your twist, the document would certainly need to be amended to reflect the correct sponsor.

[J Simmons]

Are Company A and Company B a control group or an affiliated service group?

[Santo Gold]

Are Company A and Company B a control group or an affiliated service group?

They are a controlled group

[J Simmons]

Are Company A and Company B a control group or an affiliated service group?

They are a controlled group

Off the top, I would think the account balances stay put, in the plan. The employees of Company B are yet employees included for testing purposes because of the controlled group. Logically, they have not had a termination of employment from the control-group employer. But logic is a pied piper for much of ERISA.