Two Plans Merge on 12/31/2014

[austin3515]

Plan B is merging into Plan A. The legal documents say merger is as of 12/31/2014. The assets do not move until 1/15/2015. We're reporting the transfer in on the 2014 income statement in the appropriate section, but where do we put it on the 2014 balance sheet? Other receivable?

[We did this effective 12/31 to avoid a 1 day audit for Plan B].

[david rigby]

If the merger is 12/31/14, A "owns" all the assets at that date, so the Plan A Schedule H (assuming that is the relevant form) at 12/31/14 will show all the assets, and the Plan B Schedule H will show ending assets of zero.

But perhaps I misunderstand your question.

[austin3515]

I might have said the same thing, except that I have found auditors more likely to call it a transfer in transit, because the trust itself that comprises the plan did not possess the assets.

[david rigby]

...because the trust itself that comprises the plan did not possess the assets.

I disagree. The trust and the plan are not the same thing.

IMHO, there is no "transfer in transit", since any plan can have assets in more than one place.

Maybe it's just me.

[jpod]

The theory underlying this is that as of 12/31/14 the Trust for Plan B has become a Trust for Plan A (along with the original Trust for Plan A), and consequently all the assets have been moved from Plan B to Plan A by 12/31/14. Whether the DOL, IRS or your auditor will buy that theory is another matter, but if the merger resolutions and amendments were drafted appropriately I believe it is very defensible.

[My 2 cents]

...because the trust itself that comprises the plan did not possess the assets.

I disagree. The trust and the plan are not the same thing.

IMHO, there is no "transfer in transit", since any plan can have assets in more than one place.

Maybe it's just me.

Agreed - my understanding is that, assuming that Plan A is the surviving plan after the merger, all plan assets held by Plan B as of 12/31/14 immediately prior to the merger become Plan A assets immediately after the merger. Moving them from where Plan B held them to where Plan A wants to hold them is just a transaction under the ongoing Plan A. Plan B ceased to exist on 12/31/14 when the merger took place.

[david rigby]

BTW, I've done this, with the "deceased" plan Form 5500 showing zero participants and zero assets at EOY.

The auditor loved that approach.