Controlled Group - setting up second plan

[PFranckowiak]

Plan is just over 100 participants and is audited.

30-40 EEs will be moving to a new company - but it is part of a controlled group - same identical ownership.

Happening around 10/15.

1. Option 1 would be just to do a participating ER for the Prototype Doc and include all.

2. Option 2 would be to have new plan for the new company that would be identical. Both plans would be under 100 EE's thus avoiding the audit for 2012. Would have to combine testing for coverage. ADP test, top heavy etc.

When transferring the 30 EE's to the new plan - would you have to 100% vest or could you just transfer all of their balance over to the idential plan?

Anything else I need to worry about?

Thanks

Pat

[12AX7]

From the facts you have provided, I don't see a partial termination occurring unless the plan is perhaps amended to reduce participant benefits when spun-off, but that doesn't seem to be an issue here. I would transfer the accounts.

If both plans pass coverage separately, you could do ADP testing for each plan if that provides better results. For Top Heavy, you would need to determine if you have a required aggregation group.

This question is up Tom's alley, and he may cover something I'm not thinking of at the moment.