spinoff from open MEP

[Robin Wilson]

When client severs their relationship with MEP provider and wants to set-up their own plan, should that plan be a "restate" of an existing plan for that employer or the establishment of a new plan? My understanding is that a spinoff from a MEP is a continuation of an existing plan. Is that correct?

[MoJo]

I believe it is a continuation....

[Bird]

We've done an occasional spin-off, say where two docs split up.  I'm quite sure we have created a new plan and then spun-off the assets in a separate transaction.  Yeah it is considered a continuation of/from the original plan in a way but I don't think, e.g., that you would use the original effective date of the old plan when setting up the new plan, nor do I think you would call it a restatement.

I'm not sure if I am disagreeing...

[FORMER ESQ.]

Look to the terms of the MEP master plan document. It will give you the procedure to follow. If the procedure is unclear, please write back.  

[Robin Wilson]

When transferring assets due to a spinoff, protected benefits should be adhered to, as i understand the regs. Should the definition of compensation be considered? What about safe harbor provisions?

 

[Luke Bailey]

8 hours ago, Bird said:

We've done an occasional spin-off, say where two docs split up.  I'm quite sure we have created a new plan and then spun-off the assets in a separate transaction.  Yeah it is considered a continuation of/from the original plan in a way but I don't think, e.g., that you would use the original effective date of the old plan when setting up the new plan, nor do I think you would call it a restatement.

I'm not sure if I am disagreeing...

 

5 hours ago, Robin Wilson said:

When transferring assets due to a spinoff, protected benefits should be adhered to, as i understand the regs. Should the definition of compensation be considered? What about safe harbor provisions?

 

Right. It's both. It is a new plan, but since you are merging a spinoff of the MEP into your new individual employer plan it is a continuation for purposes of counting service, vesting, no cut-back, etc.