Plan Termination / Merger

[PainPA]

A company purchased a company that I admin a plan for. The company is not accepting the plan but will accept the rollovers.

The exisitng company would like to keep the plan open and offer the employee the ability to roll into the new company plan, roll to an IRA or keep in exisiting plan.

There are a couple loans in the plan. Can these loans still be paid on (obvioulsy not thru payroll deduction) as to not to default? The loan policy states "MANNER OF REPAYMENT. Loan payments will be repaid by payroll deduction repayments as of each payroll withholding period (but at least quarterly). If the applicant revokes the payroll deduction election, the entire unpaid principal sum ofthe loan plus accrued interest (plus any other amounts due under the loan) will become due and payable."

Can this be changed to accept payments?

What options does the company have for keepign the plan open?

[david rigby]

A company purchased a company that I admin a plan for. The company is not accepting the plan ...

Before dealing w/ other Qs, it may be prudent to clarify this.

If Company A purchased Company B, isn't A now the sponsor of Plan B, thru the plan's successor language?

[PainPA]

Company A is not acccepting the Company B plan.

Are you saying that in my Company B document the plan successor language would be automatically make the A the plan sponsor?

[david rigby]

If A purchased B, probably yes, and "not accepting" the plan is not an option.

First, this requires a careful review of the buy/sell agreement.

[Madison71]

What type of purchase - stock or asset?

[PainPA]

It was a stock purchase.

[jpod]

I'm confused. You say it was a stock purchase, which I assume means that A bought the stock of B, so A now owns B and B is still in existence, or maybe B was merged into a subsidiary of A or a subsidary of A wa merged into B, but the legal result is more or less the same. Given that, what do you mean when you say that A is not accepting the plan? What is it that A is in a position to accept or not accept?

Did you mean that A will require B to terminate the plan? If so, and it's a 401k, be careful (if the plan was not terminated pre-closing).

[PainPA]

The buy/sell agreement did not identify the company B 401k plan

[jpod]

Why would it have to identify the plan? Sorry I can't be more helpful, but I'm just not sure what you're driving at.

[PainPA]

Sorry for the lack of clarification... all of my plan terminations have been complete termiantion... they either died becuase of a lack of interest or the plan sponsor could not afford...

I was going off the previous post that the buy/sell should have identified the intent... but from what I am hearing that since Comp A bought Comp B they are the proud owner of another plan.

Do they have the option to merge or not merge Comp B with theirs?

[david rigby]

The buy/sell agreement did not identify the company B 401k plan.

I'm w/ jpod here. It appears ("stock purchase") that Company A bought Company B "lock stock and barrell". If so, then the buy/sell agreement need not mention any plans, because B remains the sponsor of its plan(s), but now B is a subsidiary (or something similar) of A.

If this is an accurate summary, A has no ability to "not accept" Plan B. A is (probably) now a fiduciary of the Plan B.

Stated another way: Plan B has not changed, but Company B now has a parent company.

Yes, they have the option of merging plans, but careful review by competent advisor(s) is warranted. (Just guessing: did any lawyer look at this in advance?)