Asset Acquisition

[Guest PJTEN]

Company A acquires the assets of Company B. Company B's plan has not been terminated, but the majority of it's employees were hired by Company A. Company A has a 90 day waiting period and wants to amend to waive eligibility for those employees being brought over. Despite this being only an asset acquisition, doesn't it still make sense to review Company B's plan to ensure that they are in full compliance?

Company A has already deferred money out of their pay and can not provide us with any of the required amendments from the Company B plan. Am I making too much out of this if no rollovers are being made at this time?

Thanks

[QDROphile]

Yes. Butt out.

[Guest PJTEN]

Yes. Butt out.

Thanks, I guess!

[QDROphile]

Maybe I overrreacted, but I am sick of administrative service providers who are not responsible for compliance requiring an employer or a plan to "prove" that some action is acceptable. Why should Company A have to provide you with anything about Company B's plan? Did anyone ask you to advise about a particular issue? It looked to me like uwarranted interference and needless make-work. But perhaps I read too much into the words of the inquiry.

[Guest PJTEN]

Maybe I overrreacted, but I am sick of administrative service providers who are not responsible for compliance requiring an employer or a plan to "prove" that some action is acceptable. Why should Company A have to provide you with anything about Company B's plan? Did anyone ask you to advise about a particular issue? It looked to me like uwarranted interference and needless make-work. But perhaps I read too much into the words of the inquiry.

Don't you think it is prudent to inquire about a plan that will be your responsability? Let's say they never amended for EGTRRA, which amazingly enough has happened, then we have inherited a potential problematic plan. Wouldn't you rather that plan get itself together and then come on board?

The way I see it, Company B is going to be our problem now and therefore needs to provide evidence that they are in compliance.

Thanks for the input, anyway.

[jpod]

Has Company A agreed to take over Company B's plan, or agreed to a plan-to-plan transfer, or agreed to something else that in fact creates a potential compliance issue for Company A to worry about? These are the questions which need to be asked.

If the answer is "no," Company B nonetheless may have given reps and warranties to Company A concerning Company B's plan and/or promised to do something with respect to the plan. Company A now has Company B's employees and understandably Company A should be concerned about the fate of Company B's plan, for employee relations reasons if not for legal reasons. Check with Company A or Company A's lawyers who were involved in the transaction.