Dan
Jun 28 2004, 02:41 PM
We are merging two 401(k) plans on 7/1/04. Both plans are calendar. Firm A acquired Firm B and is now merging B's plan into A's plan. Do we test B's plan over the short plan year?
Archimage
Jun 28 2004, 03:35 PM
You actually have three different options. What you just said and two others.
1. Test the "terminating" plan through the end of the short plan year and test the surviving plan for the regular calendar year. You would treat the merged participants as new entrants as of the date of the merger.
2. Aggregate the plans and do one ADP/ACP test.
3. Test both plan through date of merger. Then do one final test from date of merger through end of calendar year.