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Scuba 401

transition rule

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do not have a lot of details but A and B are merging. B is the survivor. the transition rule states that acquisition or disposition could be a merger involving a change in employer of the employees.  See the Reg below:

(f)Certain acquisitions or dispositions. Section 410(b)(6)(C) (relating to certain acquisitions or dispositions) provides a special rule whereby aplan may be treated as satisfying section 410(b) for a limited period of time after an acquisition or disposition if it satisfies section 410(b) (without regard to the special rule) immediately before the acquisition or disposition and there is no significant change in the plan or in the coverage of theplan other than the acquisition or disposition. For purposes of section 410(b)(6)(C) and this paragraph (f), the terms “acquisition” and “disposition” refer to an asset or stock acquisition, merger, or other similar transaction involving a change in employer of the employees of a trade or business.

so what exactly does a transaction have to look like to be considered a merger.in this case two medical type groups merging with one becoming the survivor but i don't think any money or stock is changing hands.   if the term merger is a term of art what would you want to know to determine if a merger occurred?

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Sounds like a 410b6c merger to me. 

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19 hours ago, Mike Preston said:

Sounds like a 410b6c merger to me. 

a little more information - nothing changing hands. the A entity is just going away. employment being given to all the doctors and staff.  do you still consider it a merger?

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If A has no assets or liabilities or such is being liquidated/settled and A no longer exists as an entity, and then the former employees of A become employees of B, then hard pressed to say a merger, but is that truly the case? If there is equipment and/or a book of business/patients that are transferring to B then more likely a merger.

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True legal mergers are rare in private company transactions, but if A is dissolving/liquidating and B is taking over any remaining assets, employees, patients, etc. (even if not paying cash for them) I think at a minimum you have an asset acquisition or "similar transaction."

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Scuba 401, if it's a "merger" the deal document will actually use the term "merge." See if they'll send you an electronic copy and search for that term. But totally agree with EBECatty that even if not a formal "merger," it could be a "similar" transaction. Would need to review individual facts and circumstances and deal document. For example, often in a sale of assets the document will state that the buyer is going to make offers of employment to all current employees of target. That would be a factor pointing to a "similar transaction," although perhaps not conclusive depending on other facts and circumstances.

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