Successor Plan????

[Guest ksumner]

Corporation X maintains separate Profit Sharing and 401(k) Plans. They sell 85%+ assets to an unrelated corporation, Y. Y maintains a 401(k) Plan as well. Most employees of X will go to work for Y doing the same job. They will be immediately eligible to participate in Y's plan.

X wishes to terminate the 401(k) Plan, but wants to keep the PSP open for the remaining employees.

I know that the employees remaining at X must have their 401(k) balances transferred to the PSP as it is a successor plan.

I am pretty confident that we do not have a same desk rule issue or a successor plan issue (Y's plan) for those being transferred (but correct me if I'm wrong).

However, is X's PSP a successor plan for the employees being transferred to Y? If so, why?

Thanks.