splitting one plan into two... in the same asset contract?

[AlbanyConsultant]

I'm talking to a plan I'm looking to take over, and they are getting close to the audit threshold.  Luckily, they have two separate businesses in their controlled group, so I'm thinking about splitting the plan into two identical plans to avoid the audit (yes, we'll charge them a little more, but nothing near what the audit costs).

The assets are on a product platform.  One of the issues of the plan is that very few of the participants have balances, so I can deal with manually separating the download, but is there a problem with all the participants staying in the same 'contract'?  Is this a master trust?

Thanks.

[shERPA]

IIRC DOL is on record stating that if the assets are commingled that an audit is still required.  I don't have the cite handy, I'm not sure about what, if any legal authority they cited for this position and I think this was quite a while ago, but you should research this before telling the client this will avoid the audit requirement.

[chc93]

We had this situation.  A separate contract (plan) was set up, and the appropriate participants were transferred from the "first" plan to the "second" plan.  I don't recall if keeping all participants in the same contract (plan) was even an considered to be an option.