Pre-approved plans and asset acquisitions

We represent a company that is about to acquire all the assets of a company that has been a pre-approved plan provider.  Our client would like to continue that business.  Obviously, our client is not so far on the list of entities with pre-approved plans.  And waiting until they could their own opinion letter (presumably Cycle 4 at this point) would mean losing a lot of potential business.

What do entities in this situation do?  The existing plans shouldn't be any less qualified due to the change in provider.  But a) is there any procedure under which an employer which adopted such a plan as provided by our client would have the protection of the opinion letter issued to the former provider, and b) as a business matter, what has people's experience been concerning the willingness of employers to adopt a plan from an entity not on the IRS list of approved pre-approved plan providers?

To answer a) - See Appendix A., Schedule of User Fees in Rev. Proc. 2024-4, .05. There is a user fee of $300 for "(2) Assumption of sponsorship of a pre-approved plan, without any amendment to the plan document, by a new entity, as evidenced by a change of employer identification number, per basic plan document." I haven't done it, but I would guess you'd submit an application using IRS Form 4461 and answer Yes to 9.d. This is not advice as I haven't done it, but perhaps it will point you in the right direction. 

To answer b) - I don't know that most employers even know there is a list unless their advisers tell them, although it might be incumbent on the provider in this case to disclose that.

What a neat idea! That there is a user fee specified for something suggests that the thing can be done.

Thank you, @EBP! That is very helpful. 

Considering your audience, it's cruel not to provide the details.  Darn ethics.

On 12/6/2024 at 5:40 PM, Carol V. Calhoun said:

We represent a company that is about to acquire all the assets of a company that has been a pre-approved plan provider.  Our client would like to continue that business.  Obviously, our client is not so far on the list of entities with pre-approved plans.  And waiting until they could their own opinion letter (presumably Cycle 4 at this point) would mean losing a lot of potential business.

What do entities in this situation do?  The existing plans shouldn't be any less qualified due to the change in provider.  But a) is there any procedure under which an employer which adopted such a plan as provided by our client would have the protection of the opinion letter issued to the former provider, and b) as a business matter, what has people's experience been concerning the willingness of employers to adopt a plan from an entity not on the IRS list of approved pre-approved plan providers?

4 hours ago, EBP said:

To answer a) - See Appendix A., Schedule of User Fees in Rev. Proc. 2024-4, .05. There is a user fee of $300 for "(2) Assumption of sponsorship of a pre-approved plan, without any amendment to the plan document, by a new entity, as evidenced by a change of employer identification number, per basic plan document." I haven't done it, but I would guess you'd submit an application using IRS Form 4461 and answer Yes to 9.d. This is not advice as I haven't done it, but perhaps it will point you in the right direction. 

To answer b) - I don't know that most employers even know there is a list unless their advisers tell them, although it might be incumbent on the provider in this case to disclose that.

@Carol V. Calhoun So Company A uses Provider X for documents (FTW, FIS, ASC, etc).  Rather than having an opinion letter in X's name, A pays $300 and gets an opinion letter in A's name for the document provided by X. ($300 fee to IRS per document type).

Company B is now purchasing the assets of Company A, and would like an Opinion letter in B's name.

Is that the basics of what is happening here?  If so, I believe that is exactly what @EBP described in answer a).