plan termination and final paycheck timing

[K2retire]

Company A is being acquired by Company B. One of the terms of the acquisition is that A's 401(k) plan must be terminated the day before the acquisition closes. (So far, so good -- they actually planned ahead!) Company A will cease to exist following the acquisition and most employees will transfer to the Company B payroll the following day. 

Company A pays in arrears and will have a final paycheck for work done before the acquisition a week or so following the acquisition.  Because the final paycheck will be after the plan termination date, I have always understood that it is not eligible for deferrals or employer contribution calculations. Company B's TPA insists that it is because it is payment for work before the plan termination. Even if the elections below were changed, I don't believe that would apply in this situation.

Have I been mislead by multiple employers and their ERISA attorneys all these years?

 

 

[Mike Preston]

You have not been misled.  Ask Co. B's TPA for a citation.

[K2retire]

They are saying that amending the document to determine compensation using post year end compensation takes care of it.

[Mike Preston]

And they have a credible ERISA attorney backing them up?

[K2retire]

They say they do, but I haven't seen anything yet. They have also asked what we will do if their ERISA attorney tells our ERISA attorney to do it anyway.

[ETA Consulting LLC]

5 hours ago, K2retire said:

They are saying that amending the document to determine compensation using post year end compensation takes care of it.

Who's talking about post year end compensation?  This is an issue of post plan termination compensation; which cannot possibly be eligible (since the terminated plan no longer accepts contributions for compensation received after plan termination.

This is a simple concept.

Good Luck!