401(k) Plans

[Guest Karenm]

I was just reading the most recent questions and realized you had answered many question similiar to one I have, so.....

Co A is a medical practice with a 401(k) plan being acquired in an asset acquisition.

The acquiring business, Co B, is a non-profit with a 403(b) plan.

The doctors of Co A want to keep their plan the way it is (in the 401(k) funds) and separate from the acquiring employer's plan. IRA rollovers are not an option because the accounts are subject to creditors.

Is it possible for the Dr's to not liquidate subsequent to the acqusition and continue to sponsor the plan. Does the fact that employees actually had a severence from employment force the termination of the plan?

[Peter Gulia]

Karenm, you mentioned that the anticipated business change is an asset sale. This suggests that your inquirers remain the shareholders, members, or partners of the corporation, company, or partnership that maintains the plan that your inquirers want to keep. Those who control the corporation, company, or partnership could maintain it and cause it to maintain the 401(k) plan - with each of your inquirers not taking a distribution until he or she chooses to, or the plan's MDIB provisions force a distribution.

Although it's not part of your charge, your inquirers' investment and creditor-protection reasons for keeping the plan might make sense in their circumstances.

[Guest Kevin1]

ERISA Outline book indicates section 522n of the Revised Bankruptcy Code exempts all assets rolled to an IRA. Page 3B.259. Does that help with the creditors claims issues?

[Peter Gulia]

Although IRAs now are closer to qualified plans in bankruptcy treatment, some professionals still prefer an ERISA-governed plan because it can provide stronger protection against attachments and other creditors' claims before bankruptcy.