Corporation A has a SIMPLE, to which contributions have been made in 2004.
Corporation B has no plan at all.
Corporation C purchases both A & B, in mid-2004. C has no plan at all.

I don't have much in the way of specific information yet, so I'm considering generalities at this point.

Corporation C may want to establish a 401(k) plan for 2004. I do not yet know if they want to include A & B for 2004, or not. This leads to several questions. Assuming they DO want to include A & B, it would seem reasonable for A to "terminate" the SIMPLE plan. But, if the corporation A still exists, even though under new ownsership, can this be done? I'm inclined to think it can't. If you think it can, then I assume you'd have to consider it for 415 limits, etc?

If C does NOT want to include A & B, then I think they can simply establish a plan, and exclude the employees of A & B under the 410(b)(6)© exclusion. They can amend this away for 2005 if they want to, since the SIMPLE can be terminated for 2005. This seems like the cleanest way to handle the whole situation, although it may not be precisely what the client wants to do - don't know yet.

I also don't have census figures yet - so I'm not sure if it would be possible to include B while excluding A for 2004, if that is desired.

Any thoughts would be appreciated. I have a feeling that I'm looking at this cross-eyed somehow. Thanks!

Just an update with a couple of thoughts that occurred to me. It seems reasonably clear to me that Corporation A can continue the SIMPLE for 2004, while excluding B & C under 408(p)(10). Now, can C cover employees of B, while excluding employees of A under 410(b)(6)©? In other words, can you pick and choose which businesses to include and exclude under 410(b)(6)© transactions, or must you treat them all the same? I believe you can pick and choose, but maybe I'm missing something. Thanks.