Merger Effective Date vs Transfer DAte

Merger date per legal documents is 3/31/2020, but assets did not transfer until the end of July.  No extension was filed by 10/31/2020.  Is it reasonable to say that short plan year ended July 31, 2020?  That gives until 2/28/2021 to file the extension.

Interestingly the plan merged into ADP Total Source and as such my presumption is ADP will only report activity on its won platofrm, not anything before the transfer date. 

We use the "legal" date as the date of the plan merger.  Transfer of assets is irrelevant - as, as of the legal date, those assets belong to the surviving plan, despite being held elsewhere.  One plan from the merger date forward, but perhaps two custodians (and maybe even two trustees).  Add them together and go forward.....

Well thats what we do too, but I have a friend who's an auditor who is looking for a good solution to a predicament.  If they have to DFVC then so be it, but if its reasonabl to base on asset transfer then, yahoo!

22 hours ago, MoJo said:

We use the "legal" date as the date of the plan merger.

I agree but tell that to the "no service" service providers.   As Austin notes, there is no way ADP is going to incorporate data prior to them gobbling up the assets.  I don't think there is any choice but to use the transfer date.  It might even be possible to clean up the paperwork - e.g. "whereas the actual transfer of assets occurred xx/xx/20 that is the final date of merger."  Just spitballing.

(We have a transfer incoming from one of those types of providers and after getting their computer to spit out a transfer date we used that as the merger date.)

5 minutes ago, Bird said:

It might even be possible to clean up the paperwork - e.g. "whereas the actual transfer of assets occurred xx/xx/20 that is the final date of merger."  Just spitballing.

That is very very interesting!

12 minutes ago, Bird said:

I agree but tell that to the "no service" service providers.   As Austin notes, there is no way ADP is going to incorporate data prior to them gobbling up the assets.  I don't think there is any choice but to use the transfer date.  It might even be possible to clean up the paperwork - e.g. "whereas the actual transfer of assets occurred xx/xx/20 that is the final date of merger."  Just spitballing.

(We have a transfer incoming from one of those types of providers and after getting their computer to spit out a transfer date we used that as the merger date.)

 

I think that the asset transfer date is wholly incorrect, and unsupportable in the law.  The "documents" govern the terms of the plan (and the merger), NOT THE inability of others to move assets.  Indeed, in some cases, it take years for assets to move (try getting assets out of TIAA's general account product).  ADP apparently already has assets for the surviving plan, and if they can't then take on the new participants, and the data provided to them, time to FIRE them.

I work for a service provider and we do this all the time.....

I second Mojo's answer. From a legal point of view, we look to the effective date of the merger agreement, not the actual transfer date of assets. But, I can see how this really complicates administration. 

16 minutes ago, MoJo said:

time to FIRE them.

Somehow I doubt clients will see something like this as a fireable offense, LOL...  When you're enormous you get to make the rules.  Well of course not under the eyes of the law, but in every other sense it's gospel.

Just now, austin3515 said:

Somehow I doubt clients will see something like this as a fireable offense, LOL...  When you're enormous you get to make the rules.  Well of course not under the eyes of the law, but in every other sense it's gospel.

Until the DOL questions why the form 5500 doesn't contain all of the assets...  Or the plan auditor qualifies the audit because the held away assets weren't included.  Or a competitor (like us!) come a knocking telling your client they are getting bad advice....  🙂

19 hours ago, MoJo said:

Or a competitor (like us!) come a knocking telling your client they are getting bad advice....

I'm not arguing with you about the correctness of any of this but I can try to tell a new client why a giant like ADP is wrong, or I can poke myself in the eye with a sharp stick and get to the same place.

I get this all the time with Fidelity and TIAA-CREF.  Clients often cannot believe that these giant behemoths could possibly be wrong about anything.

22 hours ago, FORMER ESQ. said:

I second Mojo's answer. From a legal point of view, we look to the effective date of the merger agreement, not the actual transfer date of assets. 

Third.

6 hours ago, Bird said:

I'm not arguing with you about the correctness of any of this but I can try to tell a new client why a giant like ADP is wrong, or I can poke myself in the eye with a sharp stick and get to the same place.

Well, we prove ADP wrong often.  It's the approach you take in conveying the information.  We discuss it, but then produce regs, secondary source write-ups, our write-ups, and let them talk to the experts (me and my team!) who have a knack at being persuasive!