Controlled Group - Spin Off

[PFranckowiak]

I have a PSP that is a controlled group. Two companies, one owned by wife and one by husband. They have the plan together.

No other EE's.

They are going through a divorce. Company's will no longer be a controlled group.

As a result Company A (husband) will retain his plan and Company B(wife) will cease to be a participating ER.

The wife wants to set up her own plan and be able to put a contribution in for 2011.

Company A plan does not have a last days requirement.

For the year end PS contribution for Company A - would Company B have to deposit the same percentage as company A for payroll through date or cessation?

In Company B's new plan for the year then would I have to count only pay from the date the plan started.

Goal is to separate ASAP and have each make their own year end contribution in their own plan.

Thanks for your help.

Pat

[QNPG]

I have a PSP that is a controlled group. Two companies, one owned by wife and one by husband. They have the plan together.

No other EE's.

They are going through a divorce. Company's will no longer be a controlled group.

As a result Company A (husband) will retain his plan and Company B(wife) will cease to be a participating ER.

The wife wants to set up her own plan and be able to put a contribution in for 2011.

Company A plan does not have a last days requirement.

For the year end PS contribution for Company A - would Company B have to deposit the same percentage as company A for payroll through date or cessation?

In Company B's new plan for the year then would I have to count only pay from the date the plan started.

Goal is to separate ASAP and have each make their own year end contribution in their own plan.

Thanks for your help.

Pat

Since no employees, exempt from non-discrimination testing so I don't see a problem with not giving her a contribution in Co A Plan and her starting her own plan in the same year. It would be different if there were employees - it is my understanding that if the employer is part of a related group (CG) for one day in the plan year, then they are a CG for the entire plan year.

Edit: So long as the PS formula is discretionary...

[PFranckowiak]

Okay another question. If she sets up her own plan and wants to transfer most, but not all of her money is their a problem with a distributable even since she did not terminate employment, but her company terminated participation in the plan more like a spin off plan.

Suggestions?

Thanks

Pat

[12AX7]

If it's just profit sharing source money in her account, then the plan could allow for in-service distributions at her current age. When she adopts the new plan, just include the in-service provision.