In-house Attorney

I looked through the relevant Code and the Plan document and wanted to run one more thing by you. The termination section of the plan essentially provides that the plan freezes (no new contributions, etc.) once the board elects to terminate but also states that all other provisions of the Plan remain in force. The Plan further provides a Participating Affiliate, which the other two companies would be, may withdraw from the Plan and the Trust without the Plan Sponsor i.e. the sold company's written consent. The Participating Affiliate just has to adopt a plan and trust identical to the original one and then the assets of the Trust allocable to Employees of the Participating Affiliates are transferred to the trust adopted by the Participating Affiliates. Based on these two sections, it would seem that we could accomplish what we want to (i.e. move the employees of the two companies to the new plan). It would also seem the employees remaining with the company terminating the plan would be able to receive a disbursement since they will no longer be employees of the two companies (and continuing control group) starting the new plan. Am I interpreting this correctly?

Thank you Luke and Former Esq. The termination cannot be unwound since the closing occurred on 12/31 and the buyer would have successor plan issues if the plan was reinstated and sponsorship was then transferred to the other affiliates in the control group. That would have been the way to go but I think that ship has sailed. There has not been any communications with the participants in the terminated plan yet but the termination resolutions didn't contemplate a spin-off. But if I understand both of you correctly it sounds like if the participants in the terminated plan that are employed by the other affiliates agree to transfer their accounts to the new plan then we are ok? That seems to be the position the service provider is taking since the original plan sponsor is no longer in the control group.

Thanks. Could the employees of the two remaining entities be required to move to a spun-off plan established by the two remaining entities instead of being able to take a distributions in some other fashion?

Three companies were members of a control group with employees from all three entities participating in the 401(k) plan. The company that originally set up the plan was sold in a 100% stock sale effective 12/31. The buyer requested the plan be terminated effective 12/30 and the BOD passed a resolution to that effect. The remaining two companies of the control group want to set up a new 401(k) plan with the same structure as the prior plan but only the employees of the two remaining entities. Does this trigger any successor plan issues? Thanks!