ERISA11 Posted November 28, 2012 Posted November 28, 2012 In the context of an asset purchase: If the seller's prototype plan requires repayment of plan loans immediately upon a termination of employment, can loans be rolled over to the buyer's plan without amending the "immediate loan repayment" requirement (assuming both the seller and buyer plans otherwise permit in-kind rollovers)? It seems that this is done fairly regularly in the context of acquisitions, but I can't find anything indicating if the seller's plan has to be amended to eliminate the immediate loan repayment requirement in order for it to work. It would be preferable not to have to amend since it would take the plan out of prototype status. However, without an amendment, how do you get around the immediate repayment obligation? Any thoughts would be much appreciated.
ETA Consulting LLC Posted November 28, 2012 Posted November 28, 2012 It would be preferable not to have to amend since it would take the plan out of prototype status. However, without an amendment, how do you get around the immediate repayment obligation? Any thoughts would be much appreciated. I don't believe this to be the case. Many prototype plans make reference to an external "loan policy". I believe it would be the loan policy that gets amended; leaving the prototype status unaffected. Good Luck! CPC, QPA, QKA, TGPC, ERPA
ERISA11 Posted November 29, 2012 Author Posted November 29, 2012 Thanks very much for the reply. Unfortunately, the immediate repayment obligation in this case appears in the base plan document itself rather than in a separate loan policy.
ETA Consulting LLC Posted November 29, 2012 Posted November 29, 2012 Thanks very much for the reply. Unfortunately, the immediate repayment obligation in this case appears in the base plan document itself rather than in a separate loan policy. Does the adoption agreement give you an option of: 1) using the language in the document; or 2) Using a separate loan policy ? CPC, QPA, QKA, TGPC, ERPA
ERISA11 Posted November 29, 2012 Author Posted November 29, 2012 No, the Adoption Agreement doesn't make that option available. It's too bad it doesn't provide more flexibility.
ETA Consulting LLC Posted November 29, 2012 Posted November 29, 2012 Well, there are prototypes that provide that flexibility. One option would be to write the plan to a prototype with this flexibility. Good Luck! CPC, QPA, QKA, TGPC, ERPA
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