New Plan and Disaggregation

[justatester]

On 12/1/09, a group of employees spun out of a larger plan. It was an asset sale and the plan was NOT considered a successor plan. The new plan has immediate eligibility, immediate entry, 100% vesting.

For 2009, No HCEs. For 2010 No HCEs.

Now for 2011, we have HCEs. (Prior Year Testing). When applying the "otherwise excludable" option, do we use 12/1/09 as the DOH for all ees that came over as the date to apply the 'otherwise' excludable option? This would mean everyone would be considered "otherwise" excludable. Or can we use the original DOH from the previous employer?

The document has the following language: The Plan Administrator will determine the appropriate manner in which the ADP test is to be applied In the enventof a merger, spin-off, or asset transer involving the Plan, based upon such authority (if any) as may be issued by the IRS.

My gut tells me that they should use the 12/1/09 date since they decided not to consider compensation for HCE purposes.

Any thoughts.