Welfare Plan ownership change mid 5500 plan yr

[TPApril]

Company was purchased by another in October.  Calendar year plan year for welfare benefit plans.

It was a quick sale apparently with no contractual guidance on sponsorship of the benefits, but they continued through the end of the year (& actually still continue).

They are planning to have the 5500 filed under the name of the original owner who contracted the insurance carriers file for the full plan year.

Ever seen where they file a short plan year and close out the plan, and the new owner would take over the 5500 filing for the last few months for another short plan year? Or very simply show the new owner as the plan sponsor as of a 12/31 snapshot of the plan?

[Peter Gulia]

A Form 5500 report should factually state information according to what happened, or didn’t.

To help someone discern what might (or might not) have changed, and how it might have changed, and when:

Was the business purchase a purchase of assets from the company?

Or a purchase of shares of the company?

Recognize that documents governing the plan might include some that don’t look like what many employee-benefits practitioners call a plan document.

Might the buyer corporation, limited-liability company, partnership, or other organization have adopted a resolution, written consent, or other act that changed the seller’s plan’s sponsor or administrator?

While the instructions for line 3 are ambiguous, some practitioners assume one reports the administrator that is duly appointed and currently serving on the day each signer signs the Form 5500 report’s jurat, not the organization or other person that served as the plan’s administrator on or as of the last day of the reported-on period.

The instructions for lines 1 to 4 [pages 16-19], include details about what to do if: ÿ the plan’s name changed, ÿ the plan’s sponsor changed, or ÿ the plan sponsor’s EIN changed.

Again, some practitioners assume this refers to changes up to the day the administrator signs the Form 5500 report.

It might be possible that nothing changed.

This is not advice to anyone.

To answer your query, I’ve seen situations that called for reporting short plan years that end and begin with or around the business transactions’ closing date. But that sometimes happens when the m&a deal teams for both seller and buyer include not only business lawyers but also employee-benefits lawyers, who think carefully about the provisions.