a client and his brother own several companies with one of the brother's daughters. the brothers want to split up the companies so, at the end of the day, the two brothers own four of the companies and the daughter owns three of the companies on her own. currently, all 7 companies have a single 401(k) plan. as part of the exchange, all of the contracts have to be bifurcated, including the 401(k) plan.

i am thinking that the best option is a termination of the 401(k) plan. i have looked at the controlled employer regs and affiliated service group regs, which i don't think apply. the daughter found an investor who is going to run the companies with her, so that she and the investor will be 50-50 owners. the brothers are going to own their own companies 50-50, so none of the 80%/50% controlled employer requirements will be satisfied and the companies are not performing services for each other, so the affiliated service group regs are not implicated.

does anyone have any thoughts? am i overlooking anything?

thanks to anyone who can help.

Any common employees (implied, but not definitive)?
Why not simply split the plan, via a spin-off? No termination necessary.
(Look first for the simplest option, and termination rarely meets that condition.)