Successor Employer

[flosfur]

Employer X with rank & file employees had a DB plan. Employer sold the business to Y on November 7, 2003, say, and also terminated the DB plan effective Nov 7, 03. Plan assets will be distributed to the participants asap.

The rank and file employees have continued working with Y. Y now wants to adopt a DB plan.

Is the new DB plan required to recognize service for vesting/eligibility etc prior to the business purchase date?

[Mike Preston]

Interesting issue. I assume it was a stock sale. If so, Y is really a continuation of X, right? Under what theory could the service with the same corporation be excluded? If it wasn't a stock sale, then it is a much closer call. Having everything happen on the same day is a bit unfortunate. But as long as Y didn't sponsor X's plan, I would think excluding service would be the normal thing and including it would require special language in the plan.

[flosfur]

I never understood the distinction between a Stock sale & an Assets sale. I better read up on it. Be as it may...

It is a medical practice - Doctor X sold the practice to Doctor Y. X is no longer there and Y never worked in this practice before buying it. Y did not sponsor the DB plan maintained by X.

I presume this is both a Stock & Assets sale, whatever that implies !?

[david rigby]

Likely this has happened before, and the question has already been answered. (Unfortunately, I'm not sure where to look for confirmation.)

[flosfur]

I searched using both "Predecessor Employer" & "Successor Employer" but nothing came out. Without the quotes, I get millions of hits for the Employer!

[david rigby]

Searched where? My first guess would be PLRs.

Perhaps DOL regs?

[mbozek]

Why not call counsel for Y and ask what the terms of the sale were- Asset or stock. I am assuming that the sold practice was incorporated. Also the purchase agreement should have some reference to the service credit for the acquired employees, assuming that it is well drafted so why not review it. No one can give you an answer without reviewing the purchase documents. There may be a problem if the med practice was unincorporated.