WCC Posted September 8, 2020 Posted September 8, 2020 Companies A and B were related due to a controlled group. Company A sponsors a qualified plan, Company B is a participating employer. Due to recent ownership changes the companies are no longer related. Company B decides to terminate all employees and the entity will no longer exist. Company B will be removed as a participating employer. Company A does not want the balances of Company B participants to remain in the plan due to administrative concerns. Question: What can be done with the balances of the terminated Company B participants who have funds in the plan? Is there any exception to forcing out a participant whose balance exceeds $5,000 in this situation? I have not found this situation addressed in the plan document. Thank you
Lou S. Posted September 8, 2020 Posted September 8, 2020 Short of spinning off company B employees to a new company B plan (before Company B ceases to exist) and then terminating the company B plan I am not aware of a rule that would let you cash out the terminated employees from the current plan. Luke Bailey 1
WCC Posted September 8, 2020 Author Posted September 8, 2020 Thank you Lou S. I appreciate your help.
Bill Presson Posted September 8, 2020 Posted September 8, 2020 9 minutes ago, Lou S. said: Short of spinning off company B employees to a new company B plan (before Company B ceases to exist) and then terminating the company B plan I am not aware of a rule that would let you cash out the terminated employees from the current plan. Agreed. It's all about the timing on this. William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070
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