Transfer Health FSA in Asset Sale?

[Alf]

We generally think of welfare plans as being contract rights that can be transferred from one sponsor to another in an asset sale, although they are just terminated in most cases. What about health FSAs? Transferring one in an asset sale seems so much like a rollover of the unused amounts that I am cautious. Simple example would be an asset sale where all employees go over to purchaser and purchaser wants to assume all plans. Can the health FSA go over?

[Everett Moreland]

See RR 2002-32

[mbozek]

In an asset sale the amount of unused FSA contributions are transferred from seller to buyer as part of the purchase price and the buyer establishes a FSA on the day after the sale with opening account balances of the participants as of the sale date. There is no rollover because the seller owns the assets used to pay FSA benefits.