Section 404 limits when employers with different plan years merge

[KJohnson]

Employer A with a June 30 plan and tax year end merges on August 1 with Employer B who has a calendar year plan and tax year to form Employer C who has a caledar tax year. Both plans are profit sharing plans and the plans are merged into a calendar year plan. No contribution has yet been made for the June 30 tax year for Employer A but Employer C want to maximize contributions for both the 6/30 year of Employer A as well as for the calendar year of employer B and "new" employer C?

1) Can Employer C make the maximum 6/30 contribution for employer A to the merged plan because of IRC 381©(11)? How do you allocate this so that only the employees of former employer A receive the contribution? Would it be better to keep both plans up, change the Plan Year for Plan A, and then merge them on January 1?

2) How do you determine the Section 404 maximum amount which can be contributed for the 12/31 year assuming the plans are merged shortly after the employers merge?

[This message has been edited by KJohnson (edited 07-16-99).]