Assets of Multiple Employer Plan prevented from leaving

[Guest Iwonder]

This is unusual (for us) and I would ask the kind assistance of a benefits professional.

Co. A has acquired Co. B

Co. A would like to merge participants in the Co. B Plan into the Co. A Plan.

Co. B was participating in a huge multiple employer plan (Big-Plan), which has many companies in a particular industry participating.

The Big-Plan administrator is telling Co. A that the only B Plan participants who will have assets transfered from Big-Plan into A Plan are those former B Plan participants who sign an authorization to transfer their assets. Otherwise, if former B Plan participants do not sign the waiver, the assets of the non-signing former B Plan participants will remain in Big-Plan.

Is this appropriate/usual/lawful, etc.

[Jean]

I will respond based on my experience with multiple employer plans. This may or may not be the same as your Big Plan.

Generally the assets for Co B employees will transfer from the Big Plan to Plan A if it is done as a plan to plan transfer, and employer Co B would generally authorize the transfer. There may also be individually directed rollovers from Big Plan to another plan if any employees have actually terminated employment (or any other distributable event permitted by the plan) from Co B.

Maybe the Big Plan is asking for this waiver because they want to ensure that assets are not being disbursed for any reason other than a distributable event?