Acquisition of portion of control group

[Guest tashasman]

I have a question about M&A. I know that in a stock acquisition, the acquirer steps into the shoes of the acquired. Every instance I have found relates to cases where the acquirer acquires the entire target company (resulting in the target's ability/necessity to maintain a 401(k) plan null). This seems a little different.

Here are the facts:

1) Target’s parent sponsors a 401(k) plan in which Target employees participate

2) Buyer sponsors a 401(k) plan

3) Target becomes Buyer’s subsidiary at purchase

4) Target’s parent’s plan is ongoing after transaction

5) Buyer and Target are not related in any way prior to the purchase

Q1) Can Target’s parent’s plan pay out the employees who cease to work for a member of the controlled group as a result of the transaction?

Q2) Does Buyer have any obligation to Target's employees after sale date?

[Guest Sieve]

A1) If an employee no longer works for a member of the controlled group, then his/her plan presumably can pay out as a result of that individual's termination of employment.

A2) If Buyer & Target are members of a controlled group after the transaction--which they are in this case--then Buyer's plan and the plan of Target (if it continues in place) must meet IRC Section 410(b) after the transition period, taking into account all employees of the controlled group.