MEWA created as a result of transaction

[britoski]

I am advising a client that will soon be involved in the spinoff of a subsidiary. For various reasons, both buyer and seller are interested in the transferring employees remaining on sellers plans for a period following the date of the transaction. The client's vendors are advising that this arrangement is common and does not create a MEWA since the arrangement won't last beyond the end of the plan year following the year of the termination. Although I agree that the arrangement would be exempt from M-1 filing requirements, I view the arrangement is still a MEWA and am concerned that no exception to any applicable state laws would apply.

Have any of you heard of/participated in these types of arrangements? How have you dealt with state laws on MEWAs that would seem to have no exception comparable to the M-1 filing exception?

[Chaz]

It is possible that you can treat the plan as covering former employees of the seller (i.e., a "retiree" plan) rather than as employees of the buyer. In that case, it may not be a MEWA,

There are pitfalls to this approach. Talk with ERISA counsel.