Short Plan Year-ADP/ACP Testing

[Guest Lori Basilico]

Recently acquired subsidiary 401(k) plan merged into parent plan on 6/1. Sub plan in existence for 1/1-5/30. Is the sub plan required to perform ADP/ACP test for short plan year of 1/1-5/30?

Any thoughts on this issue will be appreciated.

[Alf]

There is no answer to this one. I have heard several people state that it is ok to treat the plans as having merged on the first day of the plan year. This would mean that the sub plan wouldn't test for the 1/1-5/30 year, but the parent's plan would have to take the sub's compensation and deferrals for that period into account in performing the parent's 401(k) testing.