Merged plan Form 5500 requirement

[holdco]

Good morning, everyone!

Hopefully an easy question...does anyone know if a merged plan has a Form 5500 filing requirement? I know that under Code 6057, that plan must report a change in its status (merging with another plan) on its Form 5500 for that year. Other than that, does it have another Form 5500 requirement? What about the following year? Does it have another Form 5500 filing requirement, once it is merged? I just want to make sure tha I am not missing anything in respect of what seems to be a relatively straightforward question.

Thanks so much for any replies.

[david rigby]

What do you mean "merged plan"?

Perhaps an oversimplified statement, a 5500 is required until the plan no longer exists.

For example, suppose Plans A and B are both CY, and A merges into B effective 12/31/2011.

Both plans must file a 5500 for the 2011 plan year. Probably, the 5500 for plan A would have zero particiapants and zero dollars at the end of the year, so that it will not exist on 01/01/2012 (no 5500 for the 2012 plan year).

[holdco]

What do you mean "merged plan"?

Perhaps an oversimplified statement, a 5500 is required until the plan no longer exists.

For example, suppose Plans A and B are both CY, and A merges into B effective 12/31/2011.

Both plans must file a 5500 for the 2011 plan year. Probably, the 5500 for plan A would have zero particiapants and zero dollars at the end of the year, so that it will not exist on 01/01/2012 (no 5500 for the 2012 plan year).

Thank you for the reply. I mean a plan that effectively becomes a part of another plan, making it the merged plan. We had a plan where all of its participants and account balances were merged into a master & prototype plan.

As soon as there is a merger (let's say it's effective 6/1/2011), my understanding is that the plan merging into the "taking over" plan must file notice of that change on its Form 5500 for the year, as per Code 6057(b)(3): "These notifications are made on the plan's Form 5500 (Annual Return/Report) submission for the plan year in which the change in status occurred. The notification must be filed at the time and place and in the manner prescribed in the form and any accompanying instructions."

I take it that this notification must be made even if by the time the Form 5500 is required to be filed for that plan year in which merger took place, the merged (old) plan has zero account balances and zero participants. But I guess you are saying that if the merged (old) plan is not zeroed out in the subsequent plan year, it has a Form 5500 filing requirement for that year as well? Thanks again.

[holdco]

Even more simply, let's say there are two scenarios.

1. The old plan is merged completely into the new plan on 12/31/11 (effective date), with all assets transferred into the new plan as of that date. The old plan files a final Form 5500 for 2011, indicating the plan was merged, and nothing in 2012, correct? The same reasoning (albeit different filing dates) hold if the facts are identical but the merger took place on 6/1/11, correct?

2. The old plan is merged into the new plan effective 12/31/11 (effective date), but retains some assets/participants until 5/1/2012, when everything is transferred out. What happens in this case? Does the old plan file a final 5500 for the 2011 year because the effective date supersedes the actual physical transfer? Or does it file a 5500 for 2011 and 2012, because assets exist that year, and that 2012 filing is the final one?

The 2011 5500 instructions seems to suggest the latter, but I don't know. It says: "A final return should be filed for the plan year that ends when all plan assets were legally transferred to the control of another plan." The next line, however, says "If a plan was terminated, but all plan assets were not distributed, a return must be filed for each year the plan has assets." But, this last line seems to be in the termination context?

And then there's this IRS link: www.irs.gov/retirement/article/0,,id=110293,00.html. Relevantly, it says "Do not file a Form 5500 as a "final return" if the plan has assets, liabilities, or participants at the end of the plan year." It adds, "Even if you consider a plan to have been terminated, a Form 5500 and all necessary schedules are requried to be filed until all assets have been distributed to the participants, legally transferred to the control of another plan, or reverted to the employer." Again though, this references termination...but do you think "legally transferred to the control of another plan" means merged? I actually don't.

The scant practitioner guidance I've seen out there leans on the side of filing for the year that assets exist in the merged plan, post effective date. Is there a shred of real authority on this?

[jpod]

Holdco: Your mention of an M&P plan causes me to ask, are you really merging Plan A into Plan B, or simply changing the documentation of a plan from individually-desigend to M&P? If the latter, there is no need to treat it as a merger, but if you want to treat it as a merger I suppose you can or if you've already set up a second plan by mistake then I guess you're stuck.

[holdco]

Holdco: Your mention of an M&P plan causes me to ask, are you really merging Plan A into Plan B, or simply changing the documentation of a plan from individually-desigend to M&P? If the latter, there is no need to treat it as a merger, but if you want to treat it as a merger I suppose you can or if you've already set up a second plan by mistake then I guess you're stuck.

Apologies, no, it was a merger. The M&P conversion took place later in respect of the merged plan. I misspoke, but thank you for the thought.

[david rigby]

My best guess; please check the 5500 instructions:

- the "old" plan exists until all assets have been transferred to "surviving" plan. Note: this does not require physical movement of assets, but does require changing title of which plan owns those assets.

- a merger date creates the end of the plan year (if not already EOY);

- the 5500 includes a checkbox for "final filing"; if this has been properly checked, no filing the next year.