Excess assets from DB

[cdavis25]

This might be a gray question...anyone interested in commenting??

Company A has a 401(k) plan with excess assets from their DB plan termination that occurred in 2014. They also have another company B that spun off in 2012 and adopted the 401(k) plan in 2012. That made the 401(k) plan a multiple employer plan in 2012. A has a small ownership interest in B. The companies are not a control group or ASG. Company B spun off, but never adopted the DB plan b/c it was frozen in 2012. The participants from company B were in the DB plan when they worked for company A. Can the excess assets be used as Profit Sharing contributions for both company A and B? Or, are they only allowed for A?

[jpod]

I can't speak for anyone else but I couldn't possibly suggest an answer without doing all of the analysis of pertinent Code sections and IRS guidance which, presumably, you have already done, and I am not going to do that. Can you tell us what is in the law/guidance that makes this question gray?

[cdavis25]

My research is telling me it has to be for A only. The fact that company B spun off of A, A owns a small part of B, and all the participants were in the DB plan while they were with A might make this a gray question. It is not everyday that this situation comes up. Maybe there is an exception and I am not looking in the right area of the code, regs, or guidance, which is the point of posting messages right?

[Tom Poje]

on a somewhat related line, I had submitted the following Q and A (but it wasn't among the questions answered).

Can you use the excess assets as a safe harbor contribution. (since such contributions have to be 100% vested when made to the plan)

the ERISA Atty I asked said that was a good question, the IRS people she asked 'thought' you probably could but nothing definite. someone else I know asked at one of the actuary meetings (simply question an agent on the fly), and the response was probably not. sigh.