Form 5500 filing with asset sale

[Guest JDL]

Here's a wild one -

If a company sells the assets of a subsidiary, where the subsidiary is the plan sponsor of a db pension plan, and where the buyer of the subsidiary's assets assumes the subs plan, who is responsible for the annual reporting requirements (Form 5500)? Specifically, the sub was sold AFTER the end of the plan year BUT BEFORE the Form 5500 was due. We are now in a situation where we don't know who was (or should be) responsible for the Form 5500 filing. I'm afraid that the asset sale agreement did not mention this reponsibility. Any ideas/suggestions?

[JanetM]

It is up to the parties involved. Was in this situation in 2000, decided since I was the buyer I would file to ensure the filing was done. At that point the seller was not inclined to assume cost for audit, filing etc.

good luck!

[Mike Preston]

I think the Plan Administrator is responsible. If the asset sale took place after the end of the year,then the Plan Administrator was clearly the prior firm. They no doubt have a clause in the sale agreement that binds the seller to its responsibilities up through date of sale. I would ask the buyer to inquire as to the seller's intent. If they don't intend to live up to their end of the bargain, then the buyer can invoke whatever remedies exist in the sale agreement.

[Guest JDL]

Thank you both for your responses.

[E as in ERISA]

Note: Always make sure than an "asset sale" is in fact an "asset sale." If the subsidiary is a disregarded LLC, then the tax people might be treating the sale of the interest in the LLC as an "asset sale." However, it is actually the sale of the legal interest in the entity, not just the assets. Accordingly, certain responsibilities may flow to the buyer if the agreement is silent.