Transaction

[Guest JMN]

Government sells assets to a 501©(3) organization that sponsors ERISA covered defined contribution plans. All employees of the governmental entity transfer to the 501©(3) with the sale. Clearly, the buyer can not assume sponsorship of the government's plans. However, can the plan assets be transferred in a trustee-to-trustee transfer?

[mbozek]

Government sells assets to a 501©(3) organization that sponsors ERISA covered defined contribution plans. All employees of the governmental entity transfer to the 501©(3) with the sale. Clearly, the buyer can not assume sponsorship of the government's plans. However, can the plan assets be transferred in a trustee-to-trustee transfer?

Need more info. Is the prior plan a 403b or another type of plan such as a 457 or a qualified plan?

If so what happened to plan after the sale?

Was it terminated?

Disposition of assets in a retirement plan is governed by plan documents.

Was there any mention of assets in old plan in the contract of sale?

What does counsel for the c3 say about this Q?

[Guest JMN]

Government sells assets to a 501©(3) organization that sponsors ERISA covered defined contribution plans. All employees of the governmental entity transfer to the 501©(3) with the sale. Clearly, the buyer can not assume sponsorship of the government's plans. However, can the plan assets be transferred in a trustee-to-trustee transfer?

Need more info. Is the prior plan a 403b or another type of plan such as a 457 or a qualified plan?

If so what happened to plan after the sale?

Was it terminated?

Disposition of assets in a retirement plan is governed by plan documents.

Was there any mention of assets in old plan in the contract of sale?

What does counsel for the c3 say about this Q?

Prior plans include 457 and qualified plans, and no plan has been terminated yet as the contract of sale is being negotiated. My assumption is that the cleanest option would be to terminate the gov't plans and allow participants who transfer employment to the c3 to make elective transfers to the c3 plans. Any thoughts would be greatly appreciated!

[mbozek]

Assuming that the 457 plan is operated by the government entity that was the employer, the assets of the 457 plan could be distributed to the participants after the plan is terminated and rolled over to the 403b plan. You need to review the 401a plan provisions for termination and distributon of assets.

[Guest JMN]

Assuming that the 457 plan is operated by the government entity that was the employer, the assets of the 457 plan could be distributed to the participants after the plan is terminated and rolled over to the 403b plan. You need to review the 401a plan provisions for termination and distributon of assets.

Thanks. This is the approach I had in mind, but wasn't sure if it would be possible to somehow merge the government plans into the 403(b) and/or its other DC plan. Even if this is possible, I don't know that the ©(3) would agree to this, for a couple reasons, e.g., administration associated with former employees of the seller (gov't), risk of contamination, other administrative issues, etc.

[Guest Salvador A Mander]

I question whether a government plan could be merged into an ERISA plan as part of an asset sale. The private (non-government) sponsor cannot maintain a government plan, but could the merger be considered an amendment to the government plan that conforms it to ERISA and sheds its government plan status?