plan transfers mid-yr: Short or regular plan year?

[TPApril]

Plan transferred its assets into a MEP by 6/30 of a calendar yr plan and is being merged into that plan.

For that reason, the plan as it was is filing a Final 5500.

Just wondering if the final 5500 would file as of 6/30 like a plan term that liquidates its assets, or 12/31 since it's not exactly a plan term.

[Bri]

Would you pick the date like you might for a termination?  One date in the resolution sets the termination date of the plan, but there's an actual final day the assets leave.  I know in a terming plan, that last asset day would be the date I'd put on the 5500 - leading me to suspect something similar in your case where the asset transfer completes the swallowing of the prior plan into the MEP even if that's after the date in the transfer paperwork.

[Artie M]

@Bri not sure if I agree.  Under OP's facts, generally I would use 6/30 year end but using 7/5 when asset settlement occurred would be an insignificant difference (i.e., I wouldn't lose sleep over it).  However, if the merger was time to be at the "close of business on 12/31/26" and the asset transfer finalized on 1/4/27, I think there would be a real problem  I would say the majority of plan mergers work this way and almost everyone would file a final 5500 based on the 12/31/26 merger date, notwithstanding that the assets are not fully moved until a later date.  My view is that you have to look at when all assets passed to the surviving plan's legal control. The Form 5500 instructions expressly say that, for a merger, the final reporting period ends when all plan assets were "legally transferred to the control of another plan."  As a lawyer, I view the date of "legal" transfer different from a simple settlement or posting date.  But I would have to read the asset transfer and trustee provisions, not just the effective date clause.  If the agreement transferred all assets and liabilities as of 12/31 with 1/4 settlement date (or 6/30 and 7/5 settlement date), I'd use 12/31 (or 6/30).  Even if the old trust continues to hold assets of the non-surviving plan I would argue that under the legal documents the old trustee would have no independent authority to act for the non-surviving plan after 12/31 or 6/30.  The 5500 instructions state the transfer occurs when there is a reduction of assets or liabilities with respect to one plan and the receipt of these assets "or the assumption of these liabilities by another plan."  The §414(l) Reg also recognizes that the merger date is a fact and circumstances determination and contemplates physical transfer can occur later (I recall an interest owed provision somewhere in there).   Of course it depends on how the merger agreement was drafted (I can only speak to how mine are drafted).  So you could check the merger and trust provisions for when the survivor assumed the liabilities and obtained control of the assets, and perhaps get a short trustee confirmation that 7/5 was settlement of the 6/30 transfer. If the documents and trustee confirmation support that account, I’d file the non-survivor’s final short-year return through 6/30.

I would love to hear what others do... If my view doesn't hold water, many mergers being conducted currently should have filed an additional 5500 for those few days of settlement.

[Peter Gulia]

Also, does it matter whether the plan's financial statements--whether included in a distinct CPA's audit, review, or compilation report, or only in the Form 5500 with no attachment--are on accrual accounting or on the cash-receipts-and-disbursements method of accounting?