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Employer in MEP, Spinning-Off, 5500 Reporting


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I am asking this in a half rhetorical manner.  Client had been a single employer for 5500 filing and filed under 001.  Then employer became a related employer due to an acquisition and joined parent's plan as adopting employer.  Initial 001 Form 5500 had a final filing when the assets merged into the parent's plan.  A few years later and due to ownership change, they are no longer related so the current plan is a MEP and the Client is spinning out their portion of the MEP into a stand alone plan (June 1, 2023).

My experience has been that the effective date of the newly established spin-off plan should be June 1, 2023.  The Client would use 002 since 001 had been previously used.  Since this is a spin-off, there are protected benefits and no distributable events (that is not the issue).

The service provider is insisting that the effective date be 1/1/2018 (effective date of the prior parent's plan).  My concern is that once filed, the EBSA is going to ask about all of the missing prior 5500 filings, which could be avoided with a new effective date and I also believe that the 5500 must be marked as "First Year Filing".

Any experience out there with using a prior effective date and what notices get generated?  I vote for the 2023 effective date and 002 for the plan number.  Thanks!

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You are right to be concerned.  The IRS and DOL use the pairing of the Plan Sponsor's EIN and Plan Number as a unique identifier.  In your case, there was a final filing for the EIN/001 pairing.  When the plan merged there was no reporting for that EIN/001 pairing, and starting to use that pairing now will cause confusion.  I have seen this happen under different circumstances, a request was received for an explanation for the missing filings, and it was a pain to straighten out.

The spin-off plan is a new plan, has a new effective date, and has a distinct identity from the original plan EIN/001 and the parent's plan.  The distinct identity to the agencies is EIN/002.


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acm_acm - Funny you should mention that as that is what I had done and said - will you be on the hook for all of the headaches that will occur once the 5500 is filed?  They said they would not and so I said, well yo better use the correct effective date for this new plan then.  LOL

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