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Company A acquires Company B. A maintains Plan X and B maintains Plan Y, both 401(k) plans. Company A would like to merge Plan Y into Plan X. However, Plan Y never received a determination letter, and Company A is cautious. So Company A decides to allow Company B employees to participate in Plan A, and further decides to freeze Plan Y pending it's decision as to whether or not to seek a determination letter for Plan Y, and whether or not to merge the plans.

While this is pending, Company B dismisses a large number of employees. The number of employees released would be significant with respect to Plan B but not Plan A.

The questions are:

1. Must Plan B participants be vested because there has been a discontinuance of contributions to Plan B?

2. If the answer to (1) is no (because either there is an intent to merge the plans, or because the pre-ERISA concept of substituting a comparable plan applies), then does the dismissal of employees require a partial termination analysis? With respect to which plan?

3. Should I change professions?

thanks-

rob

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