Merger???

[chris]

Client maintains 401(k) plan. Company x (unrelated to Client)maintains 401(k) plan as well. Client calls and says Client acquired ALL of e/ee's of Company x as of y date. Client and company x say no assets changed hands and no stock changed hands, but that all e/ee's terminated employment with Company x and began working for Client. On its face, it ooks like Company x's 401(k) plan is de facto terminated and Client's 401(k) just has to deal with counting/not counting prior service of Company x's e/ee's????? Another example of clients' doing things first and not letting you know until after the fact............. Suggestions/comments?? Thanks for any help.

[mbozek]

No corporation/business enters into the type of transaction you described without some written agreement negotiated by lawyers. You need to get the document to see what provisions there are regarding benefits or you need to talk to your client's attorney to discuss how the benefits are to be handled. It is possible that the purchase agreement does not contain any provisons relating to benefits or prior service with x corp (I recently represented a client that bought a co that was a sub of another corporation in which there were no benefit provisons and no plans were part of the deal) in which case the the acquired employees are treated as new hires to the plan sponsor.