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Transfer employment within controlled group - a termination?


Tom

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I've never had this come up.   Two related employers both with their own 401(k) plans, tested together.  Employee terminates with one and starts employment at the other.  She is asking about moving her money from one plan to the other or possibly taking a distribution.  I see no treason to move from one plan to the other because as soon as she does this, I can see her going back to work for the other company.  This brings up another question - if she is considered terminated from one sponsor and has less than $7,000 in that sponsor's plan I suppose she would need to take a distribution or be forced out.  Or does the $7,000 rule apply to both plans combined in a controlled group?  

Thank you.

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