Plan Merger and Elective Contribution Elections

[CLE401kGuy]

Employer A maintains 401k Plan A

Employer B maintains 401k Plan B

Employers A and B are controlled

Employer A wishes to merge Employer B's plan into the Employer A plan effective

1/1/2016 (streamlining processes and reducing cost of maintaining multiple plans and annual CPA audits).

Employer B will adopt Employer A's plan effective 1/1/16 by supplemental participation agreement. And merger documentation will be completed to merge Plan B into Plan A 1/1/16.

Item 1: Since A and B are controlled and Plan B is merging into Plan A - can the 401k elective contribution elections (i.e. Jane does 4%, Jim does 6%, etc.) continue to be withheld and deposited into Plan A effective 1/1/16 based on forms completed for Plan B - my feeling is yes, this is OK since this is a merger.

Item 2: Plan A's assets are with Custodian X while Plan B's are with Custodian Y. Due to requirements of Custodian Y, plan assets cannot be liquidated and reinvested until 2/1/16 from Plan B to Plan A. Is simply considering, Plan B's assets as part of Plan A based on merger documentation as of 1/1/16 acceptable? (Proper blackout notice would be completed based on liquidation and reinvestment timing)

Item 3: Based on liquidation and reinvestment date of 2/1/16, we'd chose which payroll withholding would be the last to be sent to Custodian Y (for Plan B which is technically part of Plan A as of 1/1/16) - i.e. we'd have the last withholding for January '16 to Custodian Y and then the first withholding for Feb '16 to Custodian X.

Any thoughts or suggestions or comments or citations would be appreciated - I've attempted to research a few items and have found some helpful checklists, but not anything that directly covers these issues... thanks, much appreciated

[QDROphile]

1 & 2 Yes, but make sure the merger documentation provides for and describes the arrangements. Trustee B will hold Plan A assets (former Plan B assets) in trust under Trust A. Interesting question is whether or not to make this transparent to Trustee B and hope that Trustee B facilitates rather than obstructs.

[Bird]

All ok in my opinion. The merger can be effective 1/1 with the physical transfer of assets at some later date.

[david rigby]

... with the physical transfer of assets at some later date.

or any later date.