Best merger date

[rcline46]

We are merging a traditional frozen DB plan into a Cash Balance plan this year. My question is whether there is a 'best date' to do the merger.

Is a short year better than a full year?

Is there a real difference between 12/31/11 and 1/1/12? I cannot see doing an SB and 5500 for a 1 day (1 millisecond?) plan year.

I am leaning toward the 12/31, but am having dizzy spells over completing the SB.

Special note - we will still run the plans separately (A+B valuations are not good) and sum the vals to do the future SBs.

[david rigby]

EOY is almost always best.

The IRS was asked the question about whether 12/31 is different than 1/1 as a merger date, at an Enrolled Actuaries meeting a few years ago. Response: as long as the intent is clear, they don't care whether the merger date is 12/31 or 1/1. Just make sure there are no side issues.

Special note - we will still run the plans separately (A+B valuations are not good) and sum the vals to do the future SBs.

This might mean different things to different people. Be careful.

BTW, don't forget:

- the requirement for an audit is based on participant count. If keeping them separate keeps both below the limit, it may be worthwhile to avoid the merger.

- if one plan has "excess assets" (ha, ha), merging be a method to reduce PBGC premiums.

[rcline46]

I think we will do 1/1 - the frozen plan is BOY value and the CB plan is EOY (forgot to mention that).

And yes the frozen plan actually has an asset surplus!