Successor plan does not want to accept deferrals from acquired plan du

[Guest LMalone]

Company A acquired Company B. Both have 401(k) plans. Company B's plan was not terminated prior to the acquisition. Company B employees are now participating in Company A's plan, and Company B's plan is inactive, awaiting some sort of disposition.

Company A has now learned that Company B's plan has big problems, definitely some prohibited transactions, possibly disqualification issues.

Company A's plan does not want to accept any portion of the assets in Company B's plan, but may be forced to accept at least the elective deferrals in a trustee-to-trustee transfer since A's plan is a successor plan.

Can anything be done with B's deferrals other than transferring them to A's plan?

Thanks.

[QDROphile]

Keep the assets in the B plan, work through the problems. After the fix, either keep the frozen B plan forever or merge it with the A plan. No one is "forced" to move anything from the B plan to the A plan, although there may be some pressure to do so.

Someone may want to ask about the definition of "due diligence."