termination of 401(k)

[Guest cngriffin]

Facts: Company A acquired the stock of company B and the two are in a parent-sub relationship (Company A is parent, company B is subsidiary). Both company A and B have their own 401(k) plans.

Question: After the stock acquisition took place, can company B terminate its own 401(k)? Or, would a termination be a sort of "de facto" merger of the two plans?

Follow up questions:

(1) What if company A acquired less than 80% of company B's stock? Does that avoid the required aggregation rules such that company B can now terminate its own plan?

(2) What if company B has an ESOP that owns 30% of company B's stock and company A owns the other 70%. Does the ESOP prevent the application of the required aggregation rules thus allowing company B to terminate the 401(k) without it being a defacto merger of the plans?

Thank you very much for your assistance.

Charles Griffin

Raleigh, NC