Seeking Order: Treatment of Employee Benefit Plans in M&A Transactions

Mergers, acquisitions, consolidations, or other reorganizations of a company can have a profound effect on employee benefit plans of the constituent companies. Choosing an asset purchase or a stock acquisition form of acquisition can impact the benefit plans of the target organization differently. For example, in a stock purchase where the buyer does not want the target’s 401(k) plan, you’ll want to terminate the plan, pre-closing.

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Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.  

• Employee Benefits & Executive Compensation Key Legal Developments Tracker
  Stay informed on new developments.
  • Retirement Plans
    IRS updates Employee Plan Compliance Resolution System (EPCRS) to, among other items, add correction procedures for overpayments; eliminate anonymous-submission VCP procedures (but add a no-fee anonymous pre-submission conference procedure); expand SCP correction by plan amendment; extend SCP correction for significant failures; and extend a temporary safe harbor correction method for certain missed elective deferrals. Rev. Proc. 2021-30.
  • Retirement Plans
    PBGC issues interim final rule establishing requirements for multi-employer pension plans in critical and declining status to apply for special financial assistance under the American Rescue Plan Act of 2021 (Pub. L. No. 117-2), § 9704. 86 Fed. Reg. 36598 (July 12, 2021). See also IRS Notice 2021-38 (providing further rules for plans receiving financial assistance).
  • ERISA Litigation
    Supreme Court declines to take up appeal of Laurent v. PricewaterhouseCoopers LLP, 945 F.3d 739 (2d Cir. 2019), letting stand the 2nd Circuit’s ruling that plan reformation resulting in additional benefit payments to plaintiffs was appropriate relief where a cash balance plan violated ERISA by using a service-based normal retirement age to determine the actuarial equivalent value of benefits at retirement. PricewaterhouseCoopers LLP v. Laurent, 2021 U.S. LEXIS 3439 (2021).

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