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Found 8 results

  1. My client that is sponsoring a defined benefit plan is considering an acquisition of another business. In scenario 1 the purchaser makes 100% cash deal and pays $3,000,000. In scenario II the purchaser pays $500,000 and covers all employees of the acquired company in the DB plan granting past service back to original date of hire with the seller. Lets assume that the value of the accrued benefits one day after the deal is $2,500,000. How does the Scenario II impact the taxation from both the buyer and the seller perspective? How is the Form 8594 prepared to report the transaction? Are there any other considerations? All the coverage, non-discrim, participations, etc. issues before and after the transaction are non-issue. Thank you in advance.
  2. We are looking to acquire a TPA, but want to know more about how these are priced by looking at comparable transactions. There aren't many comps with data around profitability, and so its hard to figure out what is a good price to offer. Would anyone have direct experience with M&A in TPAs that we can speak with? Thank you.
  3. Can someone please help me find reference to guidance that I have heard of that allows an employer to not combine two related companies into a Controlled Group for the purposes of discrimination testing in the year of acquisition, and perhaps even the year following acquisition? Thanks so much. Nancy Pritz
  4. Short well maybe long story. Company A had a plan in which they terminated less than 12 months ago and became an adopting ER of Company B (option of merger was not address w/prior service provider). Company B was recently acquired by Company C (unrelated) (believe a stock sale, but not sure). Company A is no longer part of the control group and would now like to establish a new plan. I do not know for sure if Company B is terminating their plan, let's say they are for this example. Since Company A had terminated a plan less than 12 months ago, they cannot establish a new plan without violating the Successor Plan Rules. So, is their only option a Spin-off from Company B's plan to a new plan? In order not to violate the Successor Plan Rules. What if Company A received advice that they can establish a new plan and the IRS comes in after seeing their Form 5500 and says they did violate the Successor Plan Rules; what then? Is the only option Audit Cap to plead their case and correct however the IRS says in order to keep the qualified tax status of the plan? What if Company A decides to do a Spin-off from Company B's plan, but since time has passed on their decision making and some employees of Company A were already paid out by the current service provider as part of the plan term? Can a Spin-off still be done? Thank you!
  5. I'm sure the answer is out here somewhere, but I'm in sort of a hurry. Sponsor acquired another organization in a 410(b)(6)© transaction. The acquired company has a Safe Harbor Plan (QACA), and the sponsor has a regular safe harbor match plan. Is there anyway these plans can be merged mid-year? My initial reaction is "NO" because of the mid-year amendment rules around safe harbor plans, but the sponsor pushing to merge to save administrative expenses. Obviously, they'd get the benefit of the 410 transition rules for coverage purposes. Any wiggle room here?
  6. I am preparing a 5310 for an employer who was acquired in a stock purchase (C Corporation shares were purchased). The sale and plan termination were simultaneous and occurred in July 2014. We're in November 2014 and I'm completing the 5310. Throughout the life of the plan, the employer was not a member of a Controlled Group. Today, as we file the 5310, the employer is now a wholly owned sub of the acquring company and employees are participating in the parent company's 401(k). Do I indicate on 5310 that they're a Controlled Group member? Since an affirmative answer requires a statement (explanation), my inclination is to answer that they are a Controlled Group member and provide the details in the required statement. Does anyone have a different opinion or experience with this scenario? I suspect it's fairly common.
  7. A plan sponsor was acquired via stock sale. They were told that terminating their plan before the deal closed was advisable to provide more freedom of choice to their plan participants (a distributable event allowing more distribution choices, rather than face a plan merger under the successor plan rules). The acquiring entity also did not want to take on the liabilities present in an active qualified plan with operational defects. I don't have any details on the purchase agreement between the 2 parties, unfortunately, but will guess that not much was stated regarding the retirement plan. So now we have a terminated plan that still has a number of steps to fully shut down, including current and future compliance testing, tax form filings, potential refunds, distributions, etc.. Question 1: Am I correct is thinking the acquiror has every right to insist that those tasks (and costs) be handled by the acquiree? Question 2: Does the acquiror somehow inherently own the liability for the acquired company's plan anyway, absent anything in the purchase agreement specifying that the plan trustees/officers of the acquired co. are personally responsible until the plan is shut down and beyond? Thanks for any comments and observations!
  8. We're a registered investment advisor to a credit union (credit union A) acquiring another (credit union B). A is acquiring B on 10/1 and plans to terminated B's 401k plan effective 10/1 as well. Since A currently maintains a 401k plan, is A's plan considered an alternative defined contribution plan to B's participants? If A moves the termination date up to 9/30, would A's 401k plan still be considered an alternative DC? Any help is appreciated!
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