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Merging Retirement Plans when Acquiring Companies

Merging Retirement Plans when Acquiring Companies

Merging retirement plans after an acquisition is never an easy task but the end result is normally preferred over running multiple plans under a single entity.  Unfortunately, the acquisition of a company by another will normally impact the employees’ retirement plans maintained by one or both companies. However, in many cases, the acquired company’s employees will experience an improved benefit structure and a better plan as a result of the acquisition.  At the conclusion of The Plan Sponsor University (TPSU) TPSU Founder and CEO, Fred Barstein spoke with Stephanie Wright, Manager of Benefits for a 7,000-employee healthcare organization.  Ms. Wright discusses the logical steps her organization takes when acquiring a new firm.  The strategy is one which makes for a smoother transition of the acquired company employees to her firm’s qualified plan.  Ms. Wright emphasizes the importance of working with a strong and knowledgeable qualified plan recordkeeper that can serve as the project manager and partner when either merging plans or onboarding new employees.

Full Transcript Here

Fred:
Fred Barstein with 401k TV here in Nashville. We completed one of our largest TPSU programs, and I’m here with Stephanie. Welcome, Stephanie.

Stephanie:
Thank you.

Fred:
Okay, if we ask you a few questions?

Stephanie:
Absolutely.

Fred:
Thank you. Why don’t you tell our audience a little bit about yourself and the size of your organization?

Stephanie:
Well, my name is Stephanie, and I work for a healthcare company, and we have 7,000 employees across the country.

Fred:
Great, and your role is?

Stephanie:
I’m the manager of the benefit programs there.

Fred:
Great. One of the things you talked about with the 7,000 employee company, you do mergers and acquisitions, right, and along with that comes the wonderful challenges of putting in retirement plans, so mergers and acquisitions are happening a lot. What are some pointers that you might have about how you would deal with new company retirement plans?

Stephanie:
Well, I would actually, if we had the opportunity, to terminate the current 401(k) plan before we acquired the business.

Fred:
Have the company terminated?

Stephanie:
Correct, because it would allow us an easier opportunity to move the participants from that particular entity into our plan without any kind of plan merger requirement.

Fred:
I see, yeah.

Stephanie:
Exactly.

Fred:
It makes it much cleaner.

Stephanie:
Exactly.

Fred:
Right, right.

Stephanie:
Otherwise, we work with a partner. Hopefully you have a great record keeper that has a project manager that you can work with, because we’re very lean where I’m at, and having that project management was key to keep me on task, let us know what we needed from the prior record keeper, that way we got all the data we needed. We got the funds transferred, and then voila. After the blackout period, the plan was merged.

Fred:
Maybe one of the things is if you aren’t in the M & A doing a lot of that you should make sure your record keeper has that experience.

Stephanie:
Agreed.

Fred:
Yours seem to, and that was very, very helpful.

Stephanie:
Definitely.

Fred:
Very good. Final question. A couple of things you learned today, picked up that you may wanna implement when you go back to the office?

Stephanie:
Sure. I really loved the idea of an education policy, having a plan for what you’re going to do throughout the whole year in order to keep 401(k) and saving for retirement on the top of mind’s of employees, I really, really loved that idea, so I’m gonna take that back for sure.

Fred:
Very good. Well, we’ll make sure we follow up to make sure you’re doing your education policy statement. Thanks for your time today.

Stephanie:
Absolutely. Thanks for having me.

Fred:
Thank you, and thank you for watching 401k TV.

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