Corporate acquisition/plan termination/415

I'm trying to figure out the rules when a plan is terminated just before the employer is acquired, and its employees are thereafter covered by the acquirer's plan. 

Let's call the acquired company A and its plan, Plan A. The acquiring company's plan is Plan B. The IRS site says that the 415 limit is prorated for a terminating plan, but not in the case of an individual who joins a plan late in the year. And of course, plans of a single employer are combined. 

In this case, presumably Plan A must apply a prorated 415 limit to contributions made before its termination. But because the employees of A have been employed by the same entity all year, and Plan B did not have a short plan year, presumably Plan B must combine its benefits with those of Plan A in calculating the 415 limits for Plan B. 

But does the reverse apply? Must Plan A combine its benefits with those of Plan B in calculating the 415 limits for Plan A? Common sense would seem to say no. Plan A had a short plan year, and no contributions were made to Plan B on behalf of A employees during that short plan year. But I haven't found authority directly on point. 

I'm not sure you will find direct authority on that specific question.

I think it is reasonable that the 415 limit for A is X/12 months prorated for the short year.

And agree that the 415 limit for B is simply the 415 limit since there is no short year.

So - If this is a stock sale then for the employees who were employed by A before the sale and now B after the sale then their 415 limit in B is the annual 415 limit - minus their 415 allocation in A.

If on the other hand it is a asset sale then I don't think you need to reduce B limit by the allocation in A at all.

Another way to look at this is to ask what is the plan year reported on the final Form 5500 or SF for Plan A. If as Lou notes this is an asset sale, the final plan year for Plan A could be a full 12 months (taking care to zero the assets by the end of the year).  If the Plan A final plan year is less than 12 months, then the 415 limit will be prorated.

A Plan A termination before the acquisition in a stock sale would result in a short plan year and a consequent proration of the final plan year.

In all scenarios, Plan B's plan year is the full year, and all employees who become eligible to participate during the plan year can have annual additions up to the annual limit.