Plan Sponsor No Longer Member of Controlled Group

[Guest PLHart]

At beginning of Plan Year, Company A is sponsor of 401(k) plan with other 2 member companies of controlled group as participating employers. Company goes public mid year and, due to new ownership makeup, is no longer part of controlled group with other two companies.

My question is: How much time do these companies have to separate plans and make adjustments necessary to comply with rules and regs? Do they have the same time frame afforded companies that are involved in merger situations (end of plan year following date of merger, or in this case, divestiture).

[Guest jaseed]

The PY following the PY rule is really a coverage issue concerning mergers and acquisitions.

Possibly the Plan Sponsor will not mind sponsoring a multiple employer plan ...

[IRC401]

You have relief from 410(B) and 401(a)(26) problems.

You do not have relief for ADP/ACP testing or plan document issues. If you need to make plan document changes, make then ASAP! You may need to do multiple ADP/ACP tests, and you may have some screwy results on determining who is an HCE.