Company Stock Purchase (and 401k plan)

[Guest PAINPA]

Company 'A' was purchased by Company 'B'. Company 'B' does not have a pension plan. Of the 90 members in Company 'A' 88 will now work for 'B'. The 2 remaining will be the owners from 'A'. They will leave the plan an roll into an IRA.

'B' would like the transition to be invisible in that they like the vendor where the plan currently presides and hopefully the TPA.

1.) Does the TPA terminate and file a final 5500 for A?

2.) Does the vendor need to open a new contract or can the new 'B' assume the the 'A' contract?

3.) Are all the employees considered 100% vested?

These 88 people will be doing the same job. If a new contract is needed does the money type of EEDEF and Matching get recharacterized as ROLLOVER with the new plan.

Any advice or points of interest would be greatly appreciated.

[JanetM]

If Company B purchased stock of Company A then they should be able to assume sponsorship of the plan. Plan is simply amended to change name of sponsor.

Depending on how A set up the plan you may not have much to do.

[mbozek]

Why not leave A as sponsor and add B as a participating employer? There is no termination of the plan and vendor contract can be assigned if necessary to B.

[Guest PAINPA]

Company A is totally out of the picture. The remaining 2 will not be working under the new ownership of B.

Since the 5500 is tracked by EIN wouldn't you think the ending of the plan under Company A EIN would raise a flag since a FINAL RETURN was not filed?

The vendor is saying that the need to open a new contract for Comapny B instead of reassigning. Company B likes everything about the vendor so it is an easy transition.

Thanks for all your help.

[E as in ERISA]

Painpa -- You might want to consult someone in more detail, as opposed to using this message board for an answer. Some of your conclusions don't sync with the facts that you are describing. You say that "A was purchased by...B" (and the title says it's a "stock purchase") but then you say "A is totally out of the picture." Those don't match up. But from the other facts you're providing, it sounds like it's just the former owners of A (who were also employees) who are now out of the picture? But A is still a legal subsidiary of B? So the answers you're getting would then be true?

[mbozek]

The simplest answer based on the info provided is that Co A's 401k plan will continue with either Co A or B as the sponsor, depending on how the purchase agreement is worded, without termination of the plan. What was not articulated is whether A will continue as a sub of B's controlled gp with no ee in which case B can adopt the plan or whether A's stock was swapped for B thereby merging A into B which would make B the sponsor of the plan. B can enter into a contract with the TPA.