Defined Benefit Pension Plan -- Permanency Issue

[JRN]

Employer established a new DBPP effective 1/1/2014. Employer enters into an asset sale agreement on March 15, 2015 to sell substantially all of the business assets to Buyer. Effective on close of transaction, all of the Employer's employees will become employees of the Buyer.

Employer is an S corporation. Employer will be dissolved following close of the sale.

Employer would like to fund the DBPP for 2014 plan year and for 2015 short plan year, and then terminate the DBPP.

Reason for termination: Sale of business assets; dissolution of Employer. Would this be considered a legitimate business reason for Plan termination?

[Lou S.]

I don't see a problem. The plan is ending for legit business reasons.

[david rigby]

Employer will be dissolved following close of the sale.

It's possible this will automatically terminate the plan.