401(a)(26)

[nancy]

A small employer(less than 50 ees) is a wholly owned subsidiary of a larger corporation (8,000 ees). The larger corp. maintains a DB plan but does not plan to cover the small employer. Can the small employer establish a DB plan and pass 401(a)(26)? There are HCEs in the small employer. Is the only way to apply for a QSLOB determination? We think so, but someone else has advised that they can maintain their own plan as long as it is identical to parent company plan.

[david rigby]

No QSLOB. That requires a minimum of 50.

[Guest Keith N]

I'm not sure I agree with PAX. 401(a)-26(G) states that for the purpose of 401(a)26, you can ignore (2)(A) of 414®, thus the 50 employee rule does not apply when your looking at 401(a)(26) issues. I'm not sure that helps Karen, since you still need to satisfy the rest of the 414® rules, but I wanted to point that out.

Karen, could you find another division that want to "throw in" with your client? Would a DC plan work. They are exempt from 401(a)26.

[david rigby]

I stand corrected (I think).

Do you meet the conditions necessary to establish a bonafide QSLOB?