Corp. A has no Plan, buys Corp. B which has a 401(k) in a stock sale and....stock purchase

[RayJJohnsonJr]

Corporation A has no Plan, and buys Corporation B which has a 401(k) in a stock purchase. Corporation A wants to keep the plan. What is the simple list way for them to do that? Change plan name and tax ID?

Thanks

[Bill Presson]

They can just amend the plan and become the sponsoring employer. Might change the plan name, but not sure it's required. As to the tax id, if you're referring to the EIN of the sponsor, then it would change in this scenario. If you're referring to the tax id of the plan, it wouldn't.

[david rigby]

A should also decide who is in the plan; "keep the plan" might mean "keep it to cover subsidiary B" or it might mean something else.  In addition, if the coverage is expanded, A should consider how to define eligibility service and vesting service.

[RayJJohnsonJr]

David, Corporation A wishes to keep the plan and expanded to include Corporation A's employees.  Bill, thank you that, sounds pretty simple.  I need to complicate my question a little. If A bought B in an asset sale, is A allowed to assume the plan if it wants too? In the same fashion Bill describes? 

And/or, could we make A and B a controlled group or an affiliated service group just long enough that A needs to be a plan sponsor, or the plan has to cover A's employees because of the control group situation?

It would save so much time and money to avoid having to terminate B's Plan, install a plan for a that mirrors the terminated B plan for A, and all the employees of B, having to do distribution election forms and all that inconveniences that go with that, not to mention employees can be easily confused by all the changes they don't understand.

[Bill Presson]

Can still do the same thing even in an asset sale. I would assume all the B employees would go to work on A's payroll. Might need to look a providing appropriate service credits.

[RayJJohnsonJr]

Thanks Bill. Fortunately, on this plan only employees make contributions, employer has never put in a dollar and was never intended to. So we have no vesting issues because everybody's 100% vested. 

I noticed your in Mandeville. I grew up in New Orleans and graduated from St. Paul's in Covington. My son, daughter-in-law, and grandchildren live in Covington now. My brother is tax partner with Ericksen, Krentel CPAs  on Canal Street. But I just noticed they have an office in Mandeville now to. They could be good prospects.

Thanks again Bill.

[Bill Presson]

6 minutes ago, RayJJohnsonJr said:

Thanks Bill. Fortunately, on this plan only employees make contributions, employer has never put in a dollar and was never intended to. So we have no vesting issues because everybody's 100% vested. 

I noticed your in Mandeville. I grew up in New Orleans and graduated from St. Paul's in Covington. My son, daughter-in-law, and grandchildren live in Covington now. My brother is tax partner with Ericksen, Krentel CPAs  on Canal Street. But I just noticed they have an office in Mandeville now to. They could be good prospects.

Thanks again Bill.

Ray, on the service credits, I meant for eligibility as well as vesting.

We do have an employee in Mandeville and I work with a big advisor in that area. Don't get there as often as I would like.

[Ken Marblestone]

If A bought B in an asset sale, is A allowed to assume the plan if it wants too? In the same fashion Bill describes? 

 

Not unless B agrees to transfer sponsorship; the plan doesn't come along in an asst sale.

[Ken Marblestone]

3 minutes ago, Ken Marblestone said:

 

 

 

 

4 hours ago, RayJJohnsonJr said:

David, Corporation A wishes to keep the plan and expanded to include Corporation A's employees.  Bill, thank you that, sounds pretty simple.  I need to complicate my question a little. If A bought B in an asset sale, is A allowed to assume the plan if it wants too? In the same fashion Bill describes? 

 

Not unless B agrees to transfer sponsorship; the plan doesn't come along in an asset sale.

[RayJJohnsonJr]

You are correct.  A might not want any liability risk that might come with taking over B's Plan.