Multiple Employer

[cdavis25]

A 401(k) Plan is made up of four companies that sponsor the Plan. Three of them are in a control group. The other company X is not part of the control group. Company X wants to stop it's participation in the Plan. If they do this, then do the participants from company X have a distributable event? Or, would company X need to spin off into their own Plan and then, terminate that Plan so that the participates have a distributable event?

[12AX7]

I would think that the adopting employer could cease participation in the plan and therefore create a distributable event for the participants, provided there is no successor plan. I'm not aware of any specific guidance on this particular matter, but I suppose your suggestion to create a spin-off plan would be the safest method of getting this done, but at the cost of a new plan setup, 5500 preparation etc.

I'm sure this similar issue has been addressed with PEO plans before. Perhaps someone else out there works in this market and can confirm.