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Has a guardian been appointed to handle the affairs of this individual? I would think that one should have been - or could be - and that would be the "safe" bet - getting a guardian to act on behalf of the participant and consent to the distribution.

There are a lot of (potentially) significant issues in a scenario such as this - and unfortunately THEY SHOULD HAVE BEEN ADDRESSED PRIOR TO THE SALE. Ok, I'll get off my soapbox now (I'm a "recovering" ERISA attorney and sometimes the "beast" resurfaces). The sold employer CAN (and should) have it's own plan. That can be accomplished in a couple of ways. I usually recommend a "spin off" of the portion the original plan that contained benefits for the sold employees into a plan maintained by the sold employer. Not having been involve PRIOR to the sale may cause problems to exist - including, has the structure of the sale resulted in a distributeable event to the those participants? Will the plan sponsor cooperate? What has been communicated to the employees? Does a spin off change the demographics of the existing plan such that there are pricing considerations for the recordkeeper? Are salary deferrals continuing for "sold" employees and if so, where are they going, and who is responsible (as a fiduciary) for those contributions/balance? There are many other issues too numerous for a post here at BenefitsLink.com If the sold employer starts a "new" plan without capturing the assets from the old plan, that too has pricing implication for the sold employers plan (startups are expensive to recordkeeper/employer/employees - until sufficient assets exist to support the plan (based on the business model of the service providers). Bottom line is: The plan sponsor(s) need to consult with competent counsel to discuss and evaluate the (remaining) options....