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Medical FSA During M&A


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A few questions about FSA during M&A:

1. Scenario: The FSA plan continues under the seller's plan - after the two parties agree that the seller will continue its medical FSA for the transferred employees, I am reading the buyer must have an existing medical FSA plan OR be prepared to adopt a new one. 

    QUESTION:   How soon does the buyer have to adopt a new FSA plan?  Say for example, the parties agree the buyer will continue the seller's plan until the end of the plan year.  Would the buyer have to adopt the new one after the end of the seller's plan year or is it expected that the buyer will have to adopt the new FSA plan ASAP after the close of sale?

   QUESTION:  If the buyer assumes the seller's medical FSA how does that usually work with the FSA vendor and the contract?  Does the buyer have their own contract with the vendor?  What is the usual situation with this? 

 

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