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Retirement Plans FAQs regarding Merged Plans

These frequently asked questions and answers provide general information and should not be cited as any type of legal authority. They provide the user with information responsive to general inquiries. Because these answers do not apply to every situation, yours may require additional research. 
 


 

  1. When two or more plans are merged, how many Form 5300 Applications are necessary?
  2. If there are two plans that are being merged together is it necessary to have both plans separately amended for new tax law prior to the plan merger?
  3. Will a determination letter include a reference to amendments for merger plans that are included in a determination letter application?
  4. What is the controlling date for timely adoption for GUST of merging/surviving plans?
  5. At the time of merger, what should be the qualification status of the merging plans?
  6. What plan documents of the merging plans, if any, should be included in the GUST application for the surviving plan?
 

When two or more plans are merged, how many Form 5300 Applications are necessary?

Only one Form 5300 application needs to be submitted for the 'surviving plan.´

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If there are two plans that are being merged together, is it necessary to have both plans separately amended for new tax law prior to the plan merger?

It is the position of the Service that it is sufficient for only the ´surviving plan´ to be amended as long as its amendments are written to also retroactively amend the now ´merged plan´ to comply with the new tax law requirements. A favorable determination letter for the surviving plan may be relied upon with respect to whether the merged plans were timely and correctly amended for new tax law.

With respect to current law, if two or more plans are merged prior to the end of each plan's GUST remedial amendment period, the plans may be amended to satisfy the GUST requirements in either of two ways:

  1. Each plan can be separately amended for GUST prior to the merger; or
  2. The requirement to amend for GUST can be satisfied through the surviving plan. In this instance, the GUST amendments must be adopted within the GUST remedial amendment period of the surviving plan and the merged plan(s) (see below), and the appropriate amendments must apply to each of the plans that have been merged into the survivor. Thus, some of the amendments to the surviving plan may apply to one or more of the merged plans and not to others, or may apply at different times to each of the merged plans. This would be necessary, for example, if different choices or elections were made in the operation of the merged plans prior to the merger.

    For example, if the merged plan provided for a QJSA (an IRC 411(d)(6) - protected benefit) while the surviving plan did not, the surviving plan must be amended to preserve this option for benefits accrued under the merged plan. The QJSA provisions of the surviving plan should also apply to the merged plan to the extent necessary to allow the plan to comply with current law prior to its merger into the surviving plan.

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Will a determination letter include a reference to amendments for merger plans that are included in a determination letter application?

All merger-related amendments must be included with the determination letter application, but the IRS determination letter will not address or rule on the merger.

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What is the controlling date for timely adoption for GUST of merging/surviving plans?

If only the surviving plan is amended, the GUST amendments must be adopted within the GUST remedial amendment period of the surviving plan and each merging plan. Otherwise, each plan must be amended separately for GUST prior to the close of its GUST remedial amendment period.

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At the time of merger, what should be the qualification status of the merging plans?

Merging plans must have been timely amended for all TRA 86 requirements, including IRC 401(a)(31) and 401(a)(17).

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What plan documents of the merging plans, if any, should be included in the GUST application for the surviving plan?

For each plan merged out of existence, the latest determination letter received by the plan sponsor with, if necessary, copies of the signed and dated amendments for IRC 401(a)(31) and 401(a)(17), plus a signed and dated copy of the plan document currently in effect. Submission of these documents will expedite the determination process.

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Page Last Reviewed or Updated: 20-Aug-2014