Plan Merging into PEO Plan

[austin3515]

Stand alone 401(k) plan is merging into the PEO plan of an employee leasing organization.  Stand alone plan is a 3% Safe Harbor Nonelective, calendar year is plan year.  Merger is happing effective 6/30/2017.

Do people agree that I do not need to fund the safe harbor to the "stand alone" plan pre-merger, because the PEO's plan is the continuation of the stand alone plan anyway? As such we can just fund the 3% Safe Harbor once at year-end.

Any articles on this?

[hr for me]

Is the PEO taking over the responsibility for 2017 W-2s, etc such that they will have full access to year to date information (compensation, deferrals, etc)  from the first half the year?    I know many mid-year issues with payroll and benefits come up and sometimes the new provider takes on the full year responsibility and other times they do not.  So if you haven't already,you might need to check the contract between the client and the PEO to see who is claiming responsibility for the 1st 1/2 of the year.

eta: or was the PEO already doing payroll calculations for the whole year and just merging the 401k later than the actual move to the PEO?

 

[austin3515]

Well, there will have to be 2 W-2s I imagine because half the year was paid directly by employer while 2nd half will be paid by PEO.  But is that relevant? Because they are administering the plan at year end they can simply ask for missing data. 

My question has more to do with whether the Plan that is being swallowed up has to have all of its contributions funded before being "consumed."

[hr for me]

I do think it is relevant -- years ago I pulled 3 companies out of the PEO relationship and had these issues in reverse -- two were non-calendar year moves, one was at the end of the calendar year. I realize that it might not be legally required, but is it something the PEO is willing to calculate based on numbers that are not theirs?  I haven't seen a payroll/benefits provider that is too willing to do so because they usually don't want to accept any responsibility for what happened prior to their takeover. And also there is the thought that they then have to get that 1/2 year SH contribution out of the employer rather than it already being in the plan.