may a parent assume liability for a subsidiary and avoid a termination

[Guest ERISAQuestioner]

A parent company would like to become the new plan sponsor for a subsidiary. The subsidiary has a frozen pension plan and is going out of business.

Can the parent become the new plan sponsor and avoid any 'termination' or other immediate funding issues related to the subsidiary's going out of business, basically continue things as they have been?

I think it's possible considering 'controlled group' liability. What's the authority for that?

Thanks in advance!

[Ron Snyder]

The real question is: can a bulletin board user obtain reliable legal advice from strangers on the bulletin board?

The answer to this question is the same as the answer to your question.

Corollary: How will you know the answer is correct?

[Guest ERISAQuestioner]

The real question is: can a bulletin board user obtain reliable legal advice from strangers on the bulletin board?

The answer to this question is the same as the answer to your question.

Corollary: How will you know the answer is correct?

Thanks that's a good point!

[Guest Dressageho]

You definitely want to seek legal advice IRL. You need to consider the type of plan, analyze the application of the controlled group rules, and whether the employees will also be transferring to the parent company. There are several other issues that I'm sure you'll uncover once you get all the facts out there, but if it's a wholly-owned sub who's taking over the employer role for all the employees, and the Plan allows for this type of adoption, then yes, the parent could likely adopt it. If the sub is owned less than 100% by the parent and the employees are all being laid off, you have a completely different set of facts. You should seek the counsel of an ERISA attorney in your area.