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Scuba 401

Investment options after transfer

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two 401(k) plans are merging as part of an asset sale. Plan A  contains a few variable annuities and is being merged into plan B.  Plan B does not want he variable annuities. what are Plan B's options with respect to the annuities. i was thinking worst case if they had to they could take the annuities but not allow other participants to purchase any more. but the acquiring plan sponsor would prefer to either force participants to roll them or liquidate.   

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Investment options are not protected under 411(d)(6), see 1.411(d)-4 Q&A 1 (d)(7).  So, the annuity can be removed as an option and liquidated after the merger.  Before they get too far down that path, they need to look at the contract for the annuity.  Some insurance products have restrictions that can prevent immediate liquidation of the investment.  We've had a few cases where the merged insurance product had to be kept for 12 months after the merger before the contract allowed it to be liquidated.

 

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