Corporation may make 401(k) distributions to employees transferred to unrelated company that acquired assets of trade or business of corporation

Article Abstract:

Distributions from IRC section 401(k) plans to former employees who become employees of a company purchasing substantially all of the assets of one or more of the first company's trade or business are allowable. The IRS has issued several rulings determining whether substantially all of the assets of trades or businesses have been sold for purposes of section 401(k)(10)(A)(i) which allows 401(k) distributions with no negative plan consequences. Letter Ruling 9740025 concerns the sale of a utilities' division and subsidiaries qualifying for 401(k)(10)(A)(i) treatment.

Corporate divestiture, Divestiture

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The provision of investment advice under prohibited transaction exemption 97-60

Article Abstract:

The US Labor Dept issued prohibited transaction exemption (PTE) 97-60 to Trust Company of the West and its subsidiaries which allows the companies to give investment advice to IRC section 401 benefit plan participants. The advice includes encouragement to invest in mutual fund group trusts. The exemption concerns variable fees receipt and purchase and sale of units and shares in the relevant trusts and funds. The exemption was issued because the transaction met the Dept of Labor standards of prudence and protection of the rights of the employee participants.

Investment advisers

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