Hypo: Company A acquires Company B in 1998. Company B maintains a SARSEP. For 1999, based on 414(B), do all employees of A & B have to be considered in satisfying the 25 or less eligible employee test? Assuming yes and SARSEP passes test, do all eligible employees of A & B who have 3/5 years of service w/either A or B receive contributions? Any guidance/advice is much appreciated.

Yes (for the purpose of satisfying the 3/5 year eligibility req't all e/ees of related e/ers are considered). No grace period rules as in SIMPLE plans.

[This message has been edited by Gary Steven Lesser (edited 02-14-99).]