New company being formed

[Belgarath]

Wow, what a brain cramp I'm having on a basic question. Maybe I should just go home and not think until tomorrow.

Corporation A has a plan, that is already terminated. Corporation B has a plan. the owners of Corporation A and Corporation B have formed a new Corporation C, which they own 50% each. All the employees of Corporations A and B are now on the payroll of Corporation C.

Is there any problem with Corporation C installing a plan and having the Corporation B plan merge into it, rather than terminating and offeringthe employees the right to distributions, etc?

Duh - it's a controlled group. So there certainly is no problem. I need a nap. Any observations that anyone wants to make re this situation, since my brain ceased to function earlier this afternoon?

[MoJo]

Why not just have Corp C assume responsibility for Corp B's plan, as successor sponsor, and not worry about a new plan, or a merger? Or, amend Corp B's plan to allow participation by members of the controlled group, then have Corp C become a participating employer (since all the employees are there)?

[Belgarath]

Thank you. Actually, the latter suggestion is what I had just suggested to the broker, but it appears that at this point, for reasons unknown to the broker, the attorney wants to have Corp C establish a plan then have B's plan merged into it. But we'll see.

[TPAMan]

As often as not when I hear brokers (even attorneys and accountants) refer to 'new' plans and 'mergers', they are actually talking about how the trust funds are being handled rather than the plan document.

Ultimately, both strategies work - changing plan sponsor of existing plan or new plan with old plan merger.

[david rigby]

Keep your documentation of the trustee(s) accurate.

[masteff]

for reasons unknown to the broker, the attorney wants...

Perhaps this is the cynical answer but the atty gets considerably more fees from the "new plan and merger" scenario.