Merging two 401(k) plans

[cpc0506]

Company A has a DB plan and a 401(k) plan. Company B has a 401(k) plan. Company B is looking to acquire Company A.

If the acquistion takes place, can the Company immediately merge just the 401(k) plans AND still use the transitional period for the DB plan?

[MWeddell]

Yes. The 410(b)(6)© transition period does not prematurely end unless there are material changes to the plan's demographics or the plan provisions. With that citation, you can look up the Code Section and brief regulation enforcing it yourself if you like.

[Guest Form5500Guru™]

Just a word of caution about "immediately merging" the 401(k) plans together. Company B should consider performing a compliance audit on Company's A plan before merging it with Company B's plan. If there are any operation plan issues in Company A's plans that are not "fixed" before the merger they become issues of Company B's plan. Depending on the any issues discovered it could affect the qualification status of Company B's plan.