fiona1 Posted March 1, 2012 Posted March 1, 2012 401(k) (1/1 plan year) covers division A and B. Division B spins off and starts their own plan on 10/7/2011. They are running a short year ADP test. What is the general rule in regards to compensation? Should the 10/7/2011 to 12/31/2011 include compensation for just that short period? Or does it need to include compensation for the entire 12 month period? And what about HCE status? I assume you need to look at compensation in the "lookback" year - meaning compenation from 10/7/2010 to 10/6/2011? I'm sure each situation is different - but I'm curious if there are any general rules in regards to testing spin-off plans. Thanks!
Tom Poje Posted March 2, 2012 Posted March 2, 2012 this is summed up best in the regs 1.401(k)-5 Special rules for mergers, acquisitions and similar events [reserved] in other words, there are no regulations yet, but its been that way forever. so all you can do is a good faith effort what you suggest sounds reasonable.
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