merger of two plans

[Dan]

A client is considering a merger with another client. Each firm has a DB plan and each plan would be fully funded prior to the merger. After the merger, a significant minimum funding contribution would be required. The question is ‘who would be entitled to claim the deduction for that minimum funding contribution?’ Would the successor firm be entitled to deduct the contribution or would that deduction need to flow back to the pre-merger firms?

It seems to me that the successor firm should get the deduction. That seems to make sense but its important to be certain and I would like to provide some documentation to support my conclusion. Is my thinking correct and could anyone suggest documentation? Is there a certain way that the merger of the firms and their plans should be structured so the successor firm would indeed be able to claim the deduction? Thanks for any help.

[david rigby]

Likely not all the questions to ask, here are a few:

- Stock or asset transaction?

- Merger or acquisition? Is company A buying B, or is A merging with B to form a new company C, or something else?

- What happens to the plans on the day after the transaction?

- Are the plans merged?

- Does the transaction change the plans themselves in any way?

- Etc.