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Question 170: A PEO complies with Rev. Proc. 2002-21, and ends up transferring assets for some Client Organizations ("COs") to a Spinoff Retirement Plan. Must a separate spinoff plan be established for each CO? When the spinoff plan terminates, must distributions be offered to the employees, or could the assets be transferred to yet another single employer DC plan maintained by that particular CO? If distributions are offered to the employees, then does the successor plan rule apply, in which case that CO cannot have or establish any other DC plan for 12 months following the final distribution? |
Answer: According to Rev. Proc. 2002-21, there is a single spinoff retirement plan, which holds all the assets and liabilities of all "Worksite Employees" whose COs have chosen the termination option, whether through action or inaction. You don't need to set up a separate plan for each CO. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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