Granting service credit to acquired employees for service with prior a

[SMB]

Company A acquires Company B (asset sale). Company's B's employees become employees of Company A as a result of the sale. Company A sponsors a 401(k) plan. Company B had no plan. Company A wishes to grant the new employees coming from Company B credit for service with Company B for eligibility and vesting purposes under the Company A 401(k) plan. Any problems or issues in doing do?

[M R Bernardin]

I don't think this should be a problem. The primary issue in granting prior service credit is to make sure it is nondiscriminatory. Look at the 401(a)(4)regs (1.401(a)(4)-11, I think) where they address this practice.