Company B is purchasing 100% of the assets of Company A. All employees of Company A will terminate effective July 15. Company A's 401(k) Plan is terminating.
Owners of Company A would like to make a discretionary profit sharing contribution to Company A 401(k) Plan for this final plan year.
Even though the asset sale will occur on 7/15 and all employees/owners will terminate employment effective 7/15, can Company A elect to wait until 12/31 to formally adopt a resolution to terminate the plan, thus avoiding a reduction in the compensation limit, 415 limit, 1,000hrs allocation service requirement for PS, etc...? As an added benefit, the employer would not have to provide top heavy minimum contributions since the limitation year would be extended to 12/31.
While I cannot find anything suggesting the plan is deemed terminated or must terminate as of the transaction date, it doesn't seem right that an employer could manipulate the staff funding requirements by postponing a formal plan termination.
