Successor Liability under ERISA

[Guest kg78]

Is there any reason you can see that successor liability would apply in the following situation?

Company has a frozen pension plan, 98% funded as of 12/31/08. Company is selling all assets in 1 of the many states in which it operates. Purchaser is accepting all employees, but is concerned about potential successor liability under the pension plan. The employees being transferred to the purchaser constitue less than 4% of the total workforce, and less than 2% of pension plan participants, so there is no partial plan termination. Transferred employees will be treated as any other separated employee under the seller's pension plan.

Is there any reason the purchaser should be concerned about liability under this plan? Any other issues that this coudl create?

[david rigby]

... and less than 2% of pension plan participants, so there is no partial plan termination.

That's not the test, but your conclusion is probably correct.

Buyer should consider asking the seller to vest the participants affected by the sale. Buyer should also consider, for employee relations reasons, giving vesting service to such employees in its own qualified plan(s).