401(k) Safe Harbor plan - newly acquired adopting employer

[Guest usafa89]

Employer A sponsors a safe harbor 401k plan for Employer A and all of its adopting controlled group members. All current controlled group members of Employer A participate.

A new entity will become a member of Employer A's controlled group in April 2011 through a corporate acquisition. Can new entity elect to become an adopting member of Employer A's safe harbor plan effective May 1, 2011 (i.e. mid year)?

[Guest Sieve]

I would say Yes, especially if the remaining portion of the plan year contains at least 3 months. Even if it's less than 3 months until pye, I'd still say Yes, but perhaps not as strongly.

[Tom Poje]

Ah, such situations are clearly described in the 401(k) regs. one of the few times I understand 100% of what they are saying. I'll quote the whole site:

1.401(k)-5 Special rules for mergers, acquisitionsand similar events. [Reserved]

in other words, at least at this time, you put forth a good faith effort. I don't see any 'holes' in Sieve's comment.

[Guest usafa89]

Ah, such situations are clearly described in the 401(k) regs. one of the few times I understand 100% of what they are saying. I'll quote the whole site:

1.401(k)-5 Special rules for mergers, acquisitionsand similar events. [Reserved]

in other words, at least at this time, you put forth a good faith effort. I don't see any 'holes' in Sieve's comment.

Thanks to you Tom and Sieve. Gotta love such clarity from the IRS.

[GMK]

1.401(k)-5 Special rules for mergers, acquisitionsand similar events. [Reserved]

Do you know if they considered:

1.401(k)-5 Special rules for mergers, acquisitions and similar events. [Flamboyant]

??