401(k) Plan - spin off?

I have a plan that includes two members of a controlled group, companies A & B.   They will be splitting the plan to avoid a 2019 audit, which they can do because they are very much two separate companies and two locations.  They will need to be tested together still because they are still a controlled group. 

The existing plan, covering employees of Company A, will continue to exist, but will be restated as of 8/1/2018 to edit a few details and remove the adopting employer.  There will be a new plan created for Company B and assets will transfer to the new plan. 

1) Am I correct in calling this a spin-off?

2) Does this new plan get to be #001 or is it now #002?  I would think #001 because it is the first plan for this particular EIN (of Company B) because Company B was merely an adopting employer of Company A's plan and, therefore, did not have their EIN reported on the Forms.

3) I read a thread that seemed to indicate that the new plan should be a continuation and restatement of the existing plan.  How can that be if the existing plan is continuing to exist.  Do you restate the existing plan and into two separate plans?

Thank you!

Kathryn

I think you are innocently playing a game of semantics here.  As a practical matter, what you describe is what happens - except the "error" in what you have described is that you say a "new" plan will be created for Company B.  I would not describe it as such.  If you truly do a "spin-off" a "portion" of the existing pan will continue in existence in the guise of the plan sponsored by Company B.  Take a meat clever and chop it along the lines of the respective employer's employees.  Now, tell me which one is the "surviving plan?"  Because both Company A's part of the plan and Company B's part of the plan will have history and protected benefits and possible liabilities of the original plan, both in essence or "surviving."

As a practical matter, the "new plan DOCUMENT" for Company B's plan is merely a clone of the original (modified going forward as they see fit), but needs to embody that which must remain the same from the original.

And for the record, I'd label Company B's plan 001....

Thanks!  That seems to be along the lines of prior threads.  So, both plans will be plan #001 and both will have an effective date of 6/01/1984 (original eff date for plan A).  Both will be restated as of 8/1/2018.  This makes sense. 

Company B's plan is NOT a new plan. 

If anyone disagrees, let me know.

Thank you!

Prior thread: https://benefitslink.com/boards/index.php?/topic/50722-avoid-future-audit/

6 hours ago, 401(k)athryn said:

Thanks!  That seems to be along the lines of prior threads.  So, both plans will be plan #001 and both will have an effective date of 6/01/1984 (original eff date for plan A).  Both will be restated as of 8/1/2018.  This makes sense. 

Company B's plan is NOT a new plan. 

 

If anyone disagrees, let me know.

 

Thank you!

 

 

Good advice from MoJo; I would agree completely.