Spin off, new plan, or what?

[BG5150]

Two employers in a "closed MEP" calendar year 401(k) plan (they have a business relationship that is neither a CG nor ASG.) Call them Company L and Company M. Company L sponsors the plan, and M signs a joinder agreement.

Late in 2015, as of 11/1, Company M leaves the MEP and starts its own plan. The doc was written with a short plan year 11/1 to 12/31.

Is this a spin-off? From my very quick search of the topic, a spin-off retains the plan year of the original. But if this is considered a new plan, it can have any plan year it wants.

Again? Is this a spin-off? Company M was/is its own employer, so that is not changing. Participants were not given an option to cash out or do direct rollovers.

[rcline46]

Read the original document on what to do if a company leaves the MEP plan. There are probably very specific steps to be taken. Remember there is no separation from service here, so the old plan has no way to make a distribution. (Hint - that would require a spin-off).

[BG5150]

Read the original document on what to do if a company leaves the MEP plan. There are probably very specific steps to be taken. Remember there is no separation from service here, so the old plan has no way to make a distribution. (Hint - that would require a spin-off).

Which would spin-off require: no way to make a distribution, or allowing them?

[rcline46]

Spinoff would allow distributions - sort of. If a 401(k) other items rule, But not the separation service.