Profit Sharing Spin-off

[Guest LDH1]

Company A and Company B are going to form a joint venture into which both will contribute assets and employees. Rightly or wrongly, it has been determined that the same desk rule will apply. Company A has a profit sharing plan that includes a 401(k) element. Company A is considering a spin-off with respect to the employees that are being terminated and offered positions with the joint venture. What assets can be spun-off? The entire balance of participants accounts? Only the 401(k) portion that is covered by the same desk rule? Wouldn't you be violating the terms of the plan if you don't distribute the profit sharing portion because the employees have terminated employment?