401k Plan Termination Date in Acquisition

[kmhaab]

When seller is required to terminate its 401k plan prior to the close of a merger/acquisition (stock deal), what date is typically used for the termination date?  Is it typically the day immediately prior to close? Or a date further in advance of close?  I've been using the date immediately prior to close, as plan termination is generally subject to close, and this allows participants to continue their deferrals as long as possible. However, this seems to complicate the actual administration of the termination re: timing of last contributions, etc.

Any thoughts would be appreciated!

[jpod]

My understanding is that the IRS accepts the following (albeit it is somewhat of a fiction):  plan terminates immediately prior to the closing, conditioned upon the closing.  The idea is that nobody wants to terminate unless there is in fact a closing, and IRS appreciates that.  The goal is to have the termination occur before the target company is merged into the buyer or becomes part of the buyer's controlled group, but only immediately before that occurs. 

[Griswold]

I typically see the day before closing, fwiw.

[kmhaab]

Thank you!