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Terminating Seller Welfare Plans Immediately Prior to a Stock Deal

401 Chaos

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Are there legal reasons why a Buyer may request a Seller to transfer its health and welfare benefit plans immediately prior to a stock deal? (Similar to typical provisions in stock purchase agreements where buyers may request a seller to terminate their 401(k) plans just before closing because of the 401(k) plan rules?)

That is a new twist on me but I can imagine there might be particular types of health and welfare plan offerings (e.g., some HDHP, HSA arrangements, etc.) that could potentially cause conflicts or issues for Buyer's general plans if the Buyer has those within its controlled group for a particular plan year (even if momentarily and the Buyer otherwise intends to terminate those plans).

If that is the case, can anyone provide a brief explanation of the issues and types of plans impacted?


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