Affiliated vs Non-Affiliated Service
All Affiliated Service must be recognized under law. This information is hard coded in the base plan document within the definition of "Employer".
"Employer" means the Plan Sponsor and any other entity that has adopted the Plan with the approval of the Plan Sponsor, or any other entity required to be aggregated with the Employer under Code sections 414(b), (c), (m) or (o) and the regulations thereunder. In identifying "Employer" for purposes of Section 5.05, the definition in Code sections 414(b) and (c) shall be modified as provided in Code section 415(h).
Questions B.6a/b (Eligibility) and E.4a/b (Vesting) apply to non-affiliated employers – such as a company acquired through an asset only sale.
EXAMPLE:
If a company is acquired through a "stock sale" -- the acquiring company is basically buying everything [merging the purchased company into them] -- including the history of the company. Therefore, all prior service must be recognized.
If a company is acquired through an "asset sale" - the acquiring company is only purchasing "goods" from the original company as it goes out of business. Prior service does not need to be recognized with the acquired company. The safe harbor law for recognizing non-affiliated service is the 5-year rule. However, the company may choose to recognize all non-affiliated service.