Standalone to MEP to Standalone

[taralynnf85]

Plan 001 effective date was 01/01/2017, and the Plan merged into a MEP on 02/12/2021.  This Plan spun-off from the MEP on 11/06/2023 into a newly established standalone plan.

We have some conflicting views on the effective date of the newly established standalone Plan.  I believe the original effective date should be 11/06/2023, but others believe it should be 02/12/2021.

• Plan 001 Original Effective Date was 01/01/2017.  This Plan did not file 2017, 2020 or the final 2021 5500 prior to joining the MEP.  The 2021 5500 for Plan 001 should have shown the assets as a “transfer out”; listed the receiving Plan Name; marked as a short plan year, and final 5500. 
  • Even though the assets were not distributed, this would have essentially terminated the Plan, because 001 no longer ceases to exist, and the remaining assets were absorbed into another Plan.  The only difference is that when filing the 5500, the plan merging into a MEP would answer “No” to whether there has been a resolution to terminate the Plan; whereas, a Plan Termination would have answered “Yes” and shown the assets as distributed instead of a rollover.
• The Plan joined the MEP (Plan 333) effective 02/12/2021.
• The Plan spun out of the MEP into a “newly established” standalone plan on 11/06/2023, but we are using the MEP joinder effective date of 02/12/2021 as the effective date of the newly established Plan and under Plan 001.

When preparing the 5500, it will show that the Plan has a 01/01/2023 beginning balance of zero, which is true because the assets were under a MEP (Plan 333), and then a transfer/rollover was processed during the year from the MEP.  It is being suggested that we file the 5500 using Plan Year 11/06/2023 through 12/31/2023 under Plan 001 as a short plan year, but I am arguing that we can't do that if the original effective date on the 5500 is 02/12/2021.

If we file the Plan like this, I feel as though it will trigger the IRS, and they will want to know what happened to all the other 5500 filings. 

Regardless of missed filings, I believe this Plan should be 002 with an effective date of 11/06/2023.  Filing under 001 is going to trigger a bunch of activity from the DOL and IRS that we don’t want, and potentially the correction of 2023’s 5500 (along with all other missed filings) if filed as-is under 001 with effective date 02/12/2021.

Thoughts?