457 Spinoff to a 401(k)

[oldman]

· ER A 457b Deferred Compensation Plan was established 2/1/1988

· ER B was established as a wholly owned subsidiary as of July 1, 2003 and participated in ER A 457 plan.

· Effective 7/1/12, the relationship between ER A and ER B as its wholly owned subsidiary will be ending.

· Due to this complete “spin off”, ER B will no longer be considered a governmental entity and thus will no longer be eligible to participate in ER A 457b deferred comp plan.

· ER B will be establishing a start-up 401k plan for its employees, effective 7/1/12.

With all that said will the ER B participants be able to withdrawal their money or rollover their accounts to the new 401k plan as of 07/01/12? It doesn’t appear to be distributable event, i.e., severance of employment or termination of employment. In addition, elements of same desk rule factor in that employees continue to perform same functions after business reorganization. In the ERISA world, a spinoff of the assets could move from one plan to another, but the 457 plan negates that option and I believe ER B assets must remain in ER A plan until participants are able to take a distribution under the terms of the plan.

What do you think?