Can someone tell me the proper method of accomplishing a transfer of 4

[Guest JBDixon]

Can someone tell me the proper method of accomplishing a transfer of 401(k) accounts in the instance where Small Company purchasesa Branch Operation from Big Company and retains the four employees of the Branch Operation who had been participants in Big Company 401(k) Plan? Can Big Company merely effect a Rollover of the accounts? Is an IRS Form 5310-A filing required? If IRS 5310-A is required which plan sponsor must do the filing? Any information on above sincerely appreciated.

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[MWeddell]

The IRS probably does not regard this as a separation from service sufficient to permit a 401(k) distribution. Check out whether any of the other distribution events, especially those listed in Code Section 401(k)(10) apply, but probably allowing distributions that are rolled over isn't allowed.

Transferring assets will work but the new employer must preserve optional forms of benefit payment.

Take a look at the filing instructions for Forms 5310-A. There's an exception for defined contribution plans that usually applies if there are no suspense accounts.

If Forms 5310-A are required, check out the 414(l) regulations to make sure you're not violating them and then a Form 5310-A would be filed for each of the plans involved in the transfer of assets, so each employer would be responsible for a form.

[This message has been edited by MWeddell (edited 11-05-1999).]

[QDROphile]

You might fit under section 401(k)(10) if the Branch Operation could be itself a trade or business and substantially all of the Branch assets were acquired. Check the letter rulings for what constitues a separate trade or business.