Covering employees of unrelated entity

[Nancy D]

Hi all, I am hoping for some guidance in this situation. Our client (OC) wants to sell his business to another company (AC). AC is not yet ready to buy OC but wants to test the waters by working on some projects together. If all goes well, AC will buy OC in a year or two. OC has a safe harbor 401(k) plan, AC has no plan. As of now there is no common ownership. They expect that about 50% of OCs business will be for contracts generated by AC, but OC will have some contracts independent of AC. OC and AC want to split each employee so that they work half time for OC and half for AC. They would like to continue to cover the employees 100% under OC's 401(k) plan. I was looking at Affiliated Service Group rules but get stuck because there is no shared ownership. Does anyone have any suggestions? Help?

Thank you in advance for any suggestions.

[shERPA]

Multiple employer plan. AC adopts and co-sponsors OC's plan, service with both entities counts for eligibility and vesting. Each contributes based on their share of the payroll.

[Nancy D]

Thanks, great idea!

[QDROphile]

Securities law issues must be resolved or ignored. The registration exemption may be lost until the ownership gets realigned. Ignored is the general approach. It tends to work pretty well because so few people are aware of the issue and it hs no regulatory priority.