MATRIX Posted August 20 Posted August 20 Company X sponsors a 401k plan. Company X was purchased earlier in 2025 in a stock sale to parent Company. Parent Company also owns Company Z with a 401k plan. Company X will be merged into Company Z effective 10/1 and both companies will be using the same payroll provide going forward which will be a change for Company X. (Company X plan will merge into Company Z plan at end of plan year 12/31/25). Is it necessary to formally amend the Company X 401k plan document to freeze the plan and discontinue future contributions, or is the fact that they are moving to the new payroll provider and no longer sending payroll contributions sufficient? Can a Board resolution accomplish this in lieu of an amendment? Any thoughts are welcome!
CuseFan Posted August 21 Posted August 21 So X will no longer exist as of 10/1 as it gets absorbed into Z, is that correct? Or will X now be a subsidiary of Z? You might be OK, especially in the former situation, but not knowing the language of either plan, I'd say it's safer to amend plan X to freeze and have a resolution for that and the merge into plan Z at year-end. Always better to over document in M&A situations, in my opinion. Being on same or different payroll is administrative and not relevant to plan documentation unless specifically referenced in either plan document. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
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