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We are a tax-exempt entity ("A"), merging with another tax-exempt entity ("B").  Both A and B have 457(b) Plans.

We are concerned the merger will trigger distributions under B's 457(b) Plan.  The B Plan provides for distribution upon Severance from Employment.

According to the regulations, a severance occurs when the participant has a severance from employment with the eligible employer.  Eligible employer is defined as the tax-exempt entity that establishes the Plan.  

Can A just take over the B Plan and treat it as if no severance occurred?  A did not "establish" the plan, so maybe not?  What are our options here?

Thank you.

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