Qualified Retirement Plan Considerations In Corporate Transactions

Notwithstanding the current economic uncertainty, corporate transaction activity has remained steady, meaning buyers continue to address issues relating to a target company's qualified retirement plans, such as a 401(k) plan. Treatment of a target company's 401(k) plan affects both employers and employees, so, ideally, parties in a transaction will consider preferred strategies well in advance of closing. This article discusses two approaches: terminating the plan, or maintaining it after the transaction.

Quick Hits

• Mergers and acquisitions raise numerous issues, including whether to terminate or maintain a target company's qualified retirement plan.
• The decision to terminate or maintain a plan involves various considerations, which can affect both employers and employees. Terminating the target company's plan is the most common approach in a stock deal or merger, but practical issues sometimes require maintaining the plan.