Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Manager - Defined Contribution Plans

M2B Retirement Consulting LLC
(Remote / Wexford PA)

M2B Retirement Consulting LLC logo

Plan Administrator

Aimpoint Pension
(Remote / Pompano Beach FL)

Aimpoint Pension logo

Retirement Plan Administrator

Hicks Pension Services
(Remote)

Hicks Pension Services logo

Distribution \ Loan Clerk

Retirement, LLC
(Remote / Oklahoma City OK)

Retirement, LLC logo

Retirement Plan Administrator

Hessel & Associates, LLC
(Remote / IL)

Hessel & Associates, LLC logo

Compliance Analyst - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Compliance Specialist II

EPIC RPS
(Remote)

EPIC RPS logo

DC Administrator

United Benefit Pensions Inc.
(Remote / Melville NY)

United Benefit Pensions Inc. logo

Plan Administrator Consultant

Jocelyn Pension Consulting
(Remote / Boulder CO)

Jocelyn Pension Consulting logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote / Rancho Cordova CA / Corona CA)

Nicholas Pension Consultants logo

Retirement Plan Relationship Manager – DB or DC Focus

Trinity Pension Consultants
(Remote / Akron OH / AL / IN / KY / MO / TN)

Trinity Pension Consultants logo

Benefits Supervisor

NFL Player Benefit Office
(Baltimore MD)

NFL Player Benefit Office logo

Pension Administrator

MGKS
(Remote / Phoenix AZ)

MGKS logo

Enrolled Actuary

Loren D. Stark Company
(Remote)

Loren D. Stark Company logo

Site Manager / Senior Administrator

Nicholas Pension Consultants
(Remote / AZ / ID / NM / NV / UT)

Nicholas Pension Consultants logo

Chief Pension Actuary

Loren D. Stark Company
(Remote)

Loren D. Stark Company logo

401(k) Retirement Plan Administrator

Midwest TPA with Remote Workforce
(Remote / Beachwood OH)

Junior Implementation Specialist - 401(k) Administration

Ubiquity Retirement + Savings
(Remote / San Francisco CA)

Ubiquity Retirement + Savings logo

Senior Defined Contribution Account Manager

Nova 401(k) Associates
(Remote)

Nova 401(k) Associates logo

View More Employee Benefits Jobs

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Transfer of Employment from Fifty Percent Subsidiary to Parent Corporation

(Posted June 14, 2000)

Question 51: Subsidiary A is 50% owned by Parent B. Both A and B have their own 401(k) plans. Subsidiary A is sold to another company; 15 employees transfer to Parent B. Will these employees be able to receive a distribution of plan assets from Subsidiary A's 401(k)? (The two businesses are not in an affiliated service group.)

Answer: Let's first note that A and B are not in a controlled group for any purpose. Eighty percent or more ownership is required for a parent-subsidiary controlled group. At ownership of more than 50%, you have a parent-subsidiary group for purposes of IRC 415, but for no other purpose. At exactly 50% ownership, you do not have a controlled group for any purpose.

Now, if they were part of a controlled group, the transfer of employment from A to B would not be a separation from service. However, because the two businesses are treated as separate businesses, the transfer of employment from A to B is a separation in service from A. (The sale of stock in A is irrelevant.) Because separation from service is a distributable event under IRC 401(k), the distribution is permitted under the Internal Revenue Code.


Important notice:

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.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2022 BenefitsLink.com, Inc.