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termination of plan after acquisition


WCC

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Company A is acquired in a stock purchase July 2015. Company A sponsored a safe harbor 401k plan.

Company X is the acquiring company and maintains a non safe harbor 401k plan.

After the purchase, Company X discovers historical compliance concerns with Company A's plan. Company X wants nothing to do with the assets of Company A's plan and does not want to merge the plans at a future date. Company X wants to terminate Company A's plan immediately under the premise of terminating a safe harbor mid year based on a business acquisition/change in ownership.

I have searched the EOB, but my question is this: since the termination is happening after the acquisition is final, are there any concerns with terminating this plan and allowing a distributable event to all employees under Company A's plan?

Thank you

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Agreed. They have to maintain the plan separately or merge the plans now that they're in the same controlled group.

Not sure if this will help, but if you do a "ctrl+F" search in EPCRS for "Transferred Assets," you'll find various rules that cabin off the impact of a failure with respect to assets merged into the surviving plan after a corporate transaction.

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  • 3 weeks later...

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