Eligible for Distribution due to change in controlled group membership?

[jmartin]

Bob works for Company A who in turn performs a management function for Company B. As a result, both companies are related. Bob is paid by Company A and participates in Company B's retirement plan.

Effective 7/1/12, the management function ceases and both companies are no longer related and Bob is no longer a participant under Company B's retirement plan. Bob wants to take a distribution from Company B. Ideally he wants to roll the assets to Company A who has a retirement plan.

IT would seem that according to Notice 2002-4 (part III) as well as GSM 39824, he is considered to have severance of employment due to the change in the controlled group status. My confusion relates to another "requirement" which is that no assets of the plan follow the participant by being transferred to a plan maintained by the participant's employer.... That would seem to indicate that he can take a distribution and roll his account to any IRA, just not the Company A retirement plan....thoughts? Let me now if more information is needed.