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

Featured Jobs

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote)

Nicholas Pension Consultants logo

In-house Counsel, Legislative and Regulatory Advisor

Cheiron, Inc.
(Mc Lean VA / Charlotte NC / Chicago IL / CA / MD / NJ / NY / PA)

Cheiron, Inc. logo

Quality Control Specialist

Pentegra
(West Harrison NY)

Pentegra logo

Defined Benefit Consultant

AimPoint Group
(Remote)

AimPoint Group logo

Senior Defined Benefits Consultant

Loren D. Stark Company
(Remote)

Loren D. Stark Company logo

Defined Contribution Consultant

AimPoint Group
(Remote)

AimPoint Group logo

ESOP Administrator

Blue Ridge ESOP Associates
(Remote)

Blue Ridge ESOP Associates logo

Compliance Specialist II

EPIC Retirement Plan Services
(Remote / AL / AZ / CO / CT / FL / GA / IA / IL / IN / MA / MD / ME / MI / MN / MO / NC / NE / NH / NV / NY / PA / SC / TN / TX / UT / VA / VT / WI / WY)

EPIC Retirement Plan Services logo

Plan Document Specialist

The Ryding Company
(Remote / CA / HI / NC / NY / PA / TX / UT)

The Ryding Company logo

Experienced Retirement Plan Administrator

Karel-Gordon & Associates
(Remote / Deerfield IL)

Karel-Gordon & Associates logo

Documents and Operations Coordinator

Jordan & Associates Retirement Services
(Remote / Santa Rosa CA)

Jordan & Associates Retirement Services logo

Retirement Plan Administrator

The Nolan Company
(Remote)

The Nolan Company logo

Retirement Plan Administrator

PPG Retirement Plan Services, Ltd.
(Remote / Kenosha WI)

Associate General Counsel

Central Pension Fund of the IUOE
(Washington DC)

Client Service Specialist

EPIC Retirement Plan Services
(Remote / AL / AZ / CO / CT / FL / GA / IA / IL / IN / MA / MD / ME / MI / MN / MO / NC / NE / NH / NV / NY / PA / SC / TN / TX / UT / VA / VT / WI / WY)

EPIC Retirement Plan Services 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

Separation from Service in Controlled Group

(Posted February 26, 1999)

Question 8: A parent and a wholly-owned subsidiary have separate 401(k) plans. If an employee transfers from the parent to the sub (assume a new job, with no similar tasks) will the employee be considered terminated from the parent plan? Assume the plans do not address any kind of transfer provisions.

Answer: I assume your question relates to whether this is a distributable event as a separation from service under IRC 401(k)(2)(B)(i)(I). No, it is not.

The parent and the subsidiary are a controlled group under IRC 414(b). As such, they are treated as a single employer for all purposes under IRC 401. So, the transfer you describe is no different from moving from the accounting department to the shipping department of the same company. As far as IRC 401 is concerned, there has been no separation from service because the individual is working for the same company as before.

A discussion of the consequences of being in a controlled group is found in Chapter 10 of my book, Who's the Employer?.


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.