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Buyer to bring seller's ee's into their own plan - who pays ER?


TPApril

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Professional office with a 401k safe harbor cross tested plan is being sold to larger company, with sale date set for 9/1.

All employees will become part of purchasing company with immediate participation in new owner's 401k plan.

Both plans are calendar plans. The plan itself is not part of the sale and is intended to be terminated, rather than merged.

Both plans also have 1000 hours and last day worked requirements.

So there will be no employer ps contribution in seller's plan since no 12/31 eligibility, though they will be making their 3% safe harbor.

The new company (I have not seen their plan doc) has informed their intent to provide a ps contribution based on 9/1-12/31 compensation, honoring hours worked all year, but not pay.

How is this usually resolved that there seems to be no PS contribution for 1/1-8/31? I note that this info has been provided to my company, we have not been involved in any discussions until now.

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On 8/22/2023 at 4:03 PM, TPApril said:

How is this usually resolved that there seems to be no PS contribution for 1/1-8/31?

It's a business issue between the parties to handle in the acquisition agreement, with due consideration to HR issues on both sides. Actual execution details of whatever they decide may be impacted by whether it's an asset or stock deal.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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