Rolling over monies from multiple employer 401(k) Plan in stock deal t

[Guest smithee]

My client is purchasing a company that is a participant in a multiple employer 401(k) Plan in a stock deal. The selling company will cease to be a participant in the old plan as of the closing date. All employees will be re-hired under the new company and will participate in my client (the buyer's) 401(k) Plan. The transferring participants would like to roll over their new balances to the buyer plan but appear to be limited by 401(k) distribution rules because, although, the seller is discontinuing contributions in the old plan, it is not terminating this plan. Is there any way that monies can be removed from the multiple employer plan or do the participants have to wait for a distributable event?

I would appreciate any help as soon as possible.

Thanks.

[Bill Berke]

I think you are okay if I correctly remember the new "same desk rules". The implication is that your client is buying 100% of the other company. Check those new rules.

[M R Bernardin]

There are lots of options available to your client. First, when a company stops participating in a multiple employer plan, many such plans would treat that as a termination of the plan attributable to the employees of the withdrawing employer and allow payouts. If your document does not allow this, you could spin off your portion of the multiple employer plan to a separate plan prior to the closing date, terminate it and make the payouts. You need to terminate prior to the closing date, to avoid the successor plan rules. Alternatively, you can just transfer the assets and liabilities of the plan attributable to your client's employees to the buyer's plan after the sale if the buyer is willing to do that. Since this is a "transfer" rather than rollovers en masse, you have the potential worry about preserving protected benefits and following the rules of 414(l).