Precessor Employer under the Section 415 Regulations

[QNPG]

Does anyone have any practical experience in understanding the definition of Predecessor Employer in Regs. Section 1.415(f)-1©(2). I am particularly concerned/puzzled by the phrase “a continuation of all or a portion of the trade or business of the former entity”.

Two doctors operate a partnership which maintains a defined benefit plan. The doctors split and Doctor A assumes the sponsorship of the DB Plan. The employees who leave with Doctor B are paid their benefits under the DB Plan, except for Doctor B. Doctor B is apparently not paid because the plan is under-funded. His benefit is still held in the old DB Plan currently sponsored by Doctor A. Doctor B now wants to establish a cash balance plan for his business. Is the partnership considered a Predecessor Employer and, as a result, must Doctor B’s benefit under the old DB Plan be aggregated with his benefit under the cash balance plan in determining his Section 415 limitations?

Any thoughts with citations or references would be greatly appreciated. Thanks.

[Andy the Actuary]

You will want to see if 415(h) applies.

[QNPG]

You will want to see if 415(h) applies.

Thanks, Andy. I appreciate the guidance. I'm going to look into that now.