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Posted

Company A is purchasing Company B.  Stock Transaction.

Company A is transitioning employees to Company B and wants to ensure that the employees in the transition get the annual PS.  PS has last day and 500 rule.

Can we amend the plan for just the employees transitioning?  Or, do we need to amend the plan to remove allocation conditions for all employees for the plan year?

I feel like we need to remove the conditions for all employees for the 2024 for Company A.....

Thoughts?

Thanks

 

Posted

My first thought is to say, if the transaction is closing on 10/1 for example, then amend the plan to say that for the 2024 plan year, employees who were employed by A on 9/30/2024 are eligible for the contribution.

But there are a lot of unanswered questions here. Is A's plan being terminated before the sale? Or is it being merged into B's plan? Does B even have a plan? Will B's employees be eligible in A's plan after the transaction?

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

Posted

Thanks CB....

Yes, 2 plans.

Plans are being kept separate for now.  

No cross eligibility intended.

I just wasn't sure if the ONLY employees affected by transitioning would be discriminatory.  The demographic of the employees moving from one plan to the other is like 2 HCE and 20 NHCE.

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