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Financial Planning / Foolish 401(k)s

URL:  https://boards.fool.com/i-believe-i-disagree-with-hawkwin-it-is-in-fact-29912939.aspx

Subject:  Re: My Company is Getting Bought (again) Date:  3/15/2012  2:30 PM
Author:  mjolah Number:  24850 of 26254

I believe I disagree with Hawkwin. It is, in fact, common in certain types of corporate transactions for the acquiring company to also acquire the plan, and then merge that plan into the acquirer's existing plan. From my perspective, that is preferable as 1) it protects the plan assets - which if distributable to participants usually (about 80%) gets spent; 2) it increases the asset size and participant base of the surviving plan allowing for greater purchasing power (and the obverse is also true - that if the assets don't go into the acquirer's plan, but the participants do (with zero balances) the plan becomes less desirable to service providers); and 3) greater protections are offered to participant assets held within a qualified retirement plan (under ERISA - a federal statute) than are offered to assets in an IRA.
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