204(h) Notice

[luissaha]

Is a 204(h) notice required when a money purchase plan is merged into a profit sharing/401(k) plan involving 2 different plan sponsors? For example, Plan A is the money purchase plan and the plan sponsor is Employer A. Plan B is the 401(k) /profit sharing plan and the plan sponsor is Employer B. Plan A will be merged into Plan B. Does a 204 (h) notice need to be sent to the participants in Plan A? Any help would be appreciated.

[Lou S.]

Yes a 204(h) notice is required.

[david rigby]

Probably the answer is Yes (although the original post may not have provided enough information). Read 204(h) carefully, and don't overlook 204(h)(9).

[Peter Gulia]

Even if section 204(h) might not require its notice, wouldn't a prudent fiduciary communicate about the changes anyhow?

[luissaha]

What complicates this a little more is that the plans involved in the merger are multiemployer plans. The plans are jointly providing notice of the merger to the participants/beneficiaries in Plan A whose acounts are being transferred to Plan B.

What is actually happening in conjunction with the merger is that the local union involved is simply amending its cba's with employers to require new contributions into Plan B. My thinking here is that this situation is similar to a case where an employer simply bargains out of one plan and into another. In a case like that, I don't believe a 204(h) notice would be required from the plan being bargained out of. Am i mistaken here?

[My 2 cents]

Aren't people covered by a CBA automatically considered as being on notice with respect to any changes agreed upon in the bargaining agreement?

[Lou S.]

I did not realize these were CBA plans. Those are not my specialty. But if you are already giving a notice about the merger would it hurt to put in 204(h) language in the notice with respect to MP -> PS?

I don't really see a down side to including it whether or not it is required, but if it turns out to be required and you don't include it could be a very expensive mistake.

[david rigby]

Don't be too casual about the merger process. A notice under 204(h) is not the only issue. Have you covered the money purchase plan provisions that cannot be eliminated?

[luissaha]

Thanks for all of the comments. I think it makes sense to send the 204(h) notice. All of the money purchase plan accounts transferred over will retain the money purchase plan characteristics. That's all covered in the merger agreement. The merger agreement did not address the 204(h) notice. Apparently, other money purchase plans merged into this ps/401(k) plan did not send the notice, but it's not worth the risk.