Jump to content
Sign in to follow this  
scrabelle

Vesting Service Under Merged Plan

Recommended Posts

Company A was acquired by Company B in an asset sale.  The Purchase Agreement provided that service with Company A would be counted as vesting service under Company B's 401(k) plan.  Company B was later acquired by Company C in a stock sale.  Company B's 401(k) plan was then merged into Company C's 401(k) plan.

X was originally employed by Company A.  He became employed by Company B as a result of the asset sale.  He terminated employment with Company B before Company B was acquired by Company C.  X was hired by Company C sometime after Company C's acquisition of Company B.  X's total vesting service under Company B's 401(k) plan (counting his service with both Company A and Company B) was longer than his break in service from the time he left Company B until he was hired by Company C.

If X received a total distribution of his account under Company B's 401(k) plan when he terminated employment with Company B, does his service with Company A count for purposes of vesting under Company C's 401(k) plan?

Share this post


Link to post
Share on other sites

Note that you may be dealing with additional issues depending on how vested the individual was when he terminated his employment (i.e. forfeited benefit restorations), but the general rule is that a cash out distribution does not affect a participant's service for vesting purposes. See ERISA Outline Book Ch.4 Sec. VI Part. A.2.e.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...