Spinoff scenario

[Guest Troy S.]

Local company was recently sold by a large Fortune 500 company to a small Europe-based owner. The legacy 401(k) plan provider gave employees a 2 week notice that the plan assets must be rolled over to a qualified plan or IRA, or will face a lump sum distribution.

Is 2 weeks a legally acceptable timeframe for this type of action? Also, what unique consideration should be given regarding plan sponsorship of a new plan when it is an overseas owner?

We are down to an April 8th deadline and trying to come up with adequate alternatives (IRA's, SEP's, new K plan, etc.). Any thoughts appreciated.

[J Simmons]

I think that those with $200 or more of benefits must be given 30 days before default payout, and then it may have to be into automatic rollover IRAs set up by the plan if they had $1,000 or more.

I would think setting up a new 401k plan and transferring the assets to it would be preferrable than violating those two provisions.