perkinsran Posted March 16, 2015 Share Posted March 16, 2015 Company A is acquired by Company B on 3/27. Company B wants to establish a new 401k plan and merge Co A asset into the new plan. Since it will take about 60 days to get new plan operational, can Co B become the sponsor of Co A plan in the meantime? My concern is the employees no longer work for company A on 3/28. Link to comment Share on other sites More sharing options...
Lou S. Posted March 16, 2015 Share Posted March 16, 2015 If they want to merge in the assets and assume the history from the old plan is there any reason they don't just take over sponsorship of the existing 401(k) and continue it? Link to comment Share on other sites More sharing options...
perkinsran Posted March 17, 2015 Author Share Posted March 17, 2015 If they take over responsibilities for the plan, do they simply amend the plan to change its name and tax id # going forward. Link to comment Share on other sites More sharing options...
Bird Posted March 17, 2015 Share Posted March 17, 2015 If they take over responsibilities for the plan, do they simply amend the plan to change its name and tax id # going forward. That's probably how I would do it (it's never as easy as it seems...if it is an asset purchase, then it really is a new company/new plan sponsor; you probably want to be specific about crediting service with the old sponsor). Ed Snyder Link to comment Share on other sites More sharing options...
Belgarath Posted March 17, 2015 Share Posted March 17, 2015 I have a personal bias against assuming plans of another employer. By the time you do all the due diligence to feel comfortable with assuming all the assets and liabilities (especially the liabilities) I swear it is often easier, possibly less expensive, and cleaner to just set up a new plan and credit prior service with the old employer. Let the prior employer worry about terminating it. Probably everyone else thinks my opinion is crazy, but I'm used to that. Link to comment Share on other sites More sharing options...
ESOP Guy Posted March 17, 2015 Share Posted March 17, 2015 I have a personal bias against assuming plans of another employer. By the time you do all the due diligence to feel comfortable with assuming all the assets and liabilities (especially the liabilities) I swear it is often easier, possibly less expensive, and cleaner to just set up a new plan and credit prior service with the old employer. Let the prior employer worry about terminating it. Probably everyone else thinks my opinion is crazy, but I'm used to that. Most plan attorneys I know say the same thing. Just set up a new plan. You don't have to worry about hidden and unknown disqualifying defects. Link to comment Share on other sites More sharing options...
Lou S. Posted March 17, 2015 Share Posted March 17, 2015 I have a personal bias against assuming plans of another employer. By the time you do all the due diligence to feel comfortable with assuming all the assets and liabilities (especially the liabilities) I swear it is often easier, possibly less expensive, and cleaner to just set up a new plan and credit prior service with the old employer. Let the prior employer worry about terminating it. Probably everyone else thinks my opinion is crazy, but I'm used to that. While I agree with this if they want to merge in t he assets as the OP suggests, it's quicker, easier & cheaper to just amend the existing plan than to start a new one and merge the old one in. Now if the old sponsor is terminating the plan and allowing rollovers, you have a whole different story as people can simple elect a rollover to the new plan, assuming it allows rollovers in. Link to comment Share on other sites More sharing options...
perkinsran Posted April 2, 2015 Author Share Posted April 2, 2015 New owners decided to create a new 401k Plan and to require current employer to decide about exiting plan. Current Plan is terminating existing plan and giving employees the right to receive cash-out of their accounts. Any reason that the new entity/plan cannot establish a safe harbor plan in 2015. Link to comment Share on other sites More sharing options...
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