What is the status of "same desk" employees if their new emp

[Guest Craig Smith]

Same Desk Rule

One corporate member of a brother sister controlled group is sold and the employees who participated in the contolled group's 401k Plan continue in the same job with the purchaser. Thus they are "same desk" employees. The purchaser is then sold to a third company and the employees continue in their same job. It appears to me that the "same desk" status remains. Any comments.

[Guest Jeff V]

Applying the same desk "logic" (if we can call it that), I'd say the participants could still not take distributions of employee pre-tax deferrals.

Of course, employee after-tax and employer contributions are available for withdrawal if the predecessor plan allows.

Have you considered filing a 5310-A and coordinating a plan-to-plan transfer with successor company A or successor company B, if they are willing to maintain protected benefits?

[Guest Craig Smith]

Originally posted by Jeff V

Applying the same desk "logic" (if we can call it that), I'd say the participants could still not take distributions of employee pre-tax deferrals.  

Of course, employee after-tax and employer contributions are available for withdrawal if the predecessor plan allows.

Have you considered filing a 5310-A and coordinating a plan-to-plan transfer with successor company A or successor company B, if they are willing to maintain protected benefits?

Thanks for the response. Unfortunately, the successors are not inclinded to accept the funds.

[Alf]

I agree that this is an example of the same-desk rule, once removed. Technically, whenever any of these employees get reassigned to a different job or line of business or terminate employment with the purchaser's purchaser, they should be eligible to take a distribution, shouldn't they? This example of having to make individual determinations and track former employees through a number of successor employers shows, once again, how stupid the same-desk rule is.

[Guest Jeff V]

I agree with what Alf said about a "substantial" change in jobs allowing for a distribution of 401(k) funds.

There was some same desk relief granted last year, but it focused on asset sales. I assume Craig's situation is a change in management, in which case the same desk rule applies unless the acquisition contract does not include an agreement for the employees to be transferred.

[Guest Laura]

there's an exception to the same desk rule for asset sales involving substantially all assets. IRS established this exception via a rev rul during 2000.

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