401(a)(26) and 410(b)(6)(C)

[John Feldt ERPA CPC QPA]

If a business transaction occurs, a transition rule under IRC 410(b)(6)© applies for coverage purposes. Does this transition period also apply regarding 401(a)(26)?

For example, employer A covers 2 of 5 nonexcludable employees in their DB plan before the business transaction occurs. They buy company B's stock. Company B has 5 employees that would meet the plan's eligibility/entry. Does 401(a)(26) require an immediate change to the plan to add more participants, or is it transitioned just like coverage?

[John Feldt ERPA CPC QPA]

Well that was easy. Yes, it applies. Okay, so I should have just looked it up first.

Treasury Regulation Section 1.401(a)(26)-1(b)(5)(i)

General rule. - Rules similar to the rules prescribed under section 410(b)(6)(C ) apply under section 401(a)(26).