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

Featured Jobs

Retirement Operations Specialist

Fringe Benefit Group
(Remote)

Fringe Benefit Group logo

Trust Accounting/5500 Specialist

Sentinel Benefits & Financial Group
(Remote / Wakefield MA)

Sentinel Benefits & Financial Group logo

Retirement Plan Administrator

ForUsAll
(Remote)

ForUsAll logo

Legal Assistant / Paralegal / Plan Document Specialist

Witman Stadtmauer, P.A.
(Remote / Florham Park NJ)

Retirement Plan Administrator

Retirement Solutions Specialists, LLC
(Remote)

Retirement Solutions Specialists, LLC logo

Pension Plan Administrator

DeMars Pension Consulting Services, Inc.
(Overland Park KS / MO / NE / OK)

Retirement Plan Administrator

Fulton Bank / Fulton Financial Advisors
(Remote)

Fulton Bank / Fulton Financial Advisors logo

DB/DC Administrator

Primark Benefits
(Remote / San Mateo CA)

Primark Benefits logo

Manager, Client Relationship Management

Guideline, Inc.
(Remote / Solana Beach CA)

Guideline, Inc. logo

Plan Administration Manager

Southern Pension Services
(Remote / Tampa FL)

Southern Pension Services logo

Product Support Specialist - Conversions

ftwilliam.com part of Wolters Kluwer Legal & Regulatory
(Remote)

ftwilliam.com part of Wolters Kluwer Legal & Regulatory logo

Mathematician or Benefit Analyst (Part-time)

American Pension, LLC
(Berkeley Heights NJ)

American Pension, LLC logo

Retirement Plan Administrator

Great Lakes Pension Associates, Inc.
(Remote)

Great Lakes Pension Associates, Inc. logo

Customer Success Associate

Guideline, Inc.
(Remote / Austin TX / Solana Beach CA / Portland ME / San Mateo CA / CO / FL / GA)

Guideline, Inc. logo

Retirement Plan Administrator

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

Nicholas Pension Consultants 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.