Participating Employer Terminating Participation in Multiple Employer Plan - Merger

[spartytax]

I'm reposting a question posted a few years ago - because the same issue has now arisen for one of my clients:

Company A participates in a multiple employer plan. Company A will be merged into unrelated Company B, and its employees will participate in Company B's 401(k) plan after the merger date.

If Company A withdraws from the multiple employer plan on the day prior to the merger, will that be considered a "plan termination" so that its employees can receive distributions from the multiple employer plan under the "plan termination" exception of 401(k)(10)?

Would Company A have to do the following to effect the plan termination: (i) withdraw from the multiple employer plan and spin off the assets in a new plan established for this purpose and then (ii) terminate that newly established plan and distribute the money to participants. Does this violate the permanency requirement? Any qualification concerns about eventually rolling over the account balances from Company A's plan into the acquiring company's plan?

Any insight would be appreciated.

[My 2 cents]

I'm reposting a question posted a few years ago - because the same issue has now arisen for one of my clients:

Company A participates in a multiple employer plan. Company A will be merged into unrelated Company B, and its employees will participate in Company B's 401(k) plan after the merger date.

If Company A withdraws from the multiple employer plan on the day prior to the merger, will that be considered a "plan termination" so that its employees can receive distributions from the multiple employer plan under the "plan termination" exception of 401(k)(10)?

Would Company A have to do the following to effect the plan termination: (i) withdraw from the multiple employer plan and spin off the assets in a new plan established for this purpose and then (ii) terminate that newly established plan and distribute the money to participants. Does this violate the permanency requirement? Any qualification concerns about eventually rolling over the account balances from Company A's plan into the acquiring company's plan?

Any insight would be appreciated.

If the participants could take their money without separating from service, is that supposed to be a good thing?