Merger Question

[ndj2377]

Our firm recently took over as actuary for two plans that were just merged into one. We are coming across a few questions that we are having difficulty finding guidance on.

Background

1. Plan A: Plan Year is 9/1 – 8/31. Last 5500 filing was for the 9/1/12 to 8/31/13 plan year

2. Plan B: Plan Year was 7/1 – 6/30. Plan had a short plan year from 7/1/13 to 8/31/13 and last 5500 filing was for that plan year. The box indicating “final return/report” was not checked.

3. Plan A and Plan B Merged effective 9/1/13. Assets and liabilities from Plan B were merged into Plan A

Questions

1. Going forward, should the new plan use the plan number held by Plan A since Plan B was merged into Plan A?

2. Should Plan B file an additional 5500 filing (9/1/13 – 8/31/14) that shows the participant count and assets going to 0 on 9/1/13 or can the last return suffice as the final filing?

3. Prior to the merger, both plans:

a. Smoothed assets;

b. Had credit balances; and

c. Had shortfall amortization charges

Does the newly merged plan only retain the asset gain/loss, credit balances, and shortfall amortization charges for Plan A effective 9/1/13, or are the asset gain/loss, credit balances, and shortfall amortization charges from Plan B merged in as well? If plan B items are merged in, is there specific guidance on how to merge those items?

Thanks for any assistance.

[david rigby]

1. Since A is the surviving plan, this seems rather obvious.

2. You may have some flexibility. See Gray Book Q&A 97-38.

3. The October 2009 regs had generous use of "reserved" whenever the topic was "merger". I'm not sure if there is anything since, but you might review later Gray Books. Notably 2012-14 and 2013-4.

But there might be other views/sources of information.