Prior DB plan offset

[Jakyasar]

I own company a 100% and had a DB plan which terminated.

I started a new company and now own only 50% and want to start a DB plan.

Same line of business.

Does my old DB offset my new DB?

[C. B. Zeller]

At 50% ownership there is not a controlled group.

It would depend on whether the new company is a "successor" within the meaning of 1.415(f)-1(c).

Quote

(2) Where plan is not maintained by successor. With respect to an employer of a participant, a former entity that antedates the employer is a predecessor employer with respect to the participant if, under the facts and circumstances, the employer constitutes a continuation of all or a portion of the trade or business of the former entity. This will occur, for example, where formation of the employer constitutes a mere formal or technical change in the employment relationship and continuity otherwise exists in the substance and administration of the business operations of the former entity and the employer.

 

[Effen]

Agree w/ CB, but just clarifying that for 415 purposes the controlled group rule is "more than 50%", so I agree that the ownership doesn't look like an issue.    

[Jakyasar]

Corey, it is the same line of biz and it is a successor biz. No issue on the CG, agreed.

[C. B. Zeller]

If it's a successor employer then the DB plans are aggregated for purposes of applying the 415 limit. In other words the distribution from the prior plan will reduce the max you can accrue in the new plan.

[Jakyasar]

So the fact that there is no CG does not eliminate the combined 415 limit?

[C. B. Zeller]

Correct. All plans maintained by the employer or by a predecessor employer are treated as a single plan for purposes of applying the 415 limit. 1.415(f)-1(a)(1)

[Jakyasar]

Thank you all for your comments