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Employee Benefits in Mergers and Acquisitions, 2018-2019 Edition by Ilene H. Ferenczy Ferenczy Benefits Law Center Employee Benefits in Mergers and Acquisitions, 2018-2019 Edition by Ilene H. Ferenczy Ferenczy Benefits Law Center

Employee Benefits in Mergers and Acquisitions, 2020-2021 Edition

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Employee Benefits in Mergers and Acquisitions

This comprehensive, easy-to-use book provides expansive coverage of employee benefits issues that arise as a result of mergers and acquisitions, including analysis of the required legal and tax compliance strategies to avoid costly litigation and the soundest business practices for administering benefits and compensation plans in a merger and acquisition setting. It is intended to guide benefits experts who have little experience with mergers and acquisitions and acquisitions specialists who have little background in benefits administration.

The 2020-2021 Edition updates the coverage of legislative and regulatory developments in the past year that affect employee benefits in mergers and acquisitions (M&A), including:

  • Updates of chapters to reflect the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act legislation and their impact on plans of companies involved in M&A transactions, as well as guidance published by the Departments of Treasury and Labor in relation to these changes
  • Discussion of the impact of the Main Street Employee Ownership Act on employee stock ownership plan lending
  • Explanation of how the SECURE Act changes make it easier to modify safe harbor 401(k) plans to accommodate changes caused by a transaction
  • Analysis of funding issues for closely held businesses with Pension Benefit Guaranty Corporation- (PBGC) covered defined benefit plans, and actions that may be taken post-transaction to preserve the ability of a sponsor to terminate an underfunded plan
  • Review of the current status of court challenges to the Patient Protection and Affordable Care Act
  • Explanation of the SECURE Act safe harbor for fiduciaries involved in purchasing annuity products for participants, particularly in a pension plan termination situation
  • Discussion of the availability of the lost participant program by the PBGC for terminated defined contribution plans
  • Continued discussion of the Internal Revenue Service’s (IRS’s) current rules relating to the availability of individual favorable determination letters for most plans, and recent modifications to those rules
  • Discussion of multiple employer plans (MEPs) and pooled employer plans, how they are affected by a company transaction, and how to terminate a plan’s participation in an MEP structure
  • Analysis of how the SECURE Act rules regarding post-year-end plan adoptions and 401(k) safe harbor initiation may offer more options for dealing with transaction-related issues
  • Current updates to PBGC premiums
  • Continued update of the IRS’s most recent changes to plan correction programs, particularly the expansion of the self-correction program, and the use of these programs to repair compliance errors found during or occurring in connection with an M&A transaction

Note: Online subscriptions are for three-month periods.

Previous Edition: Employee Benefits in Mergers and Acquisitions, 2019-2020 Edition ISBN 9781543812534

Last Updated 08/11/2020
Update Frequency Annually
Product Line Wolters Kluwer Legal & Regulatory U.S.
ISBN 9781543824537
SKU 10083492-7777
Publish Frequency Annually
Product Line Wolters Kluwer Legal & Regulatory U.S.
SKU 000000000010073214
Table of Contents

1. Introduction

  • Transactions and Benefits
  • Transactions and Human Resources
  • Approach
  • Some Terms of Art and Conventions
  • The Art and Confusion of Transactions
  • Due Diligence: Making Sure That What You See Is What You Get
  • Qualified Retirement Plans: Limiting Liability While Retaining Tax Benefits
  • ESOPs: Transactions Involving Plans with Employer Stock
  • Health and Welfare: Keeping These Plans as Healthy as the Employees
  • Executive Compensation: Handling Management in Transition
  • Employment Law and Labor Law: Transitioning Employees

2. Mergers and Acquisitions - An Overview

  • Structure of the Acquisition
  • Asset Acquisitions
  • Stock Acquisitions
  • Mergers
  • Spin-offs, Consolidations, and Recapitalizations
  • Corporate Law Considerations
  • Securities Law Considerations
  • Compliance with Hart-Scott-Rodino Antitrust Improvements Act of 1976
  • Compliance with Worker Adjustment and Retraining Notification Act

3. Due Diligence

  • Defining Due Diligence
  • Scope of Benefits Due Diligence
  • Representations, Warranties, and Indemnifications
  • Reviewing the Benefit Programs
  • Reporting Due Diligence Findings

4. Qualified Plans

  • What Is a Qualified Plan?
  • Purchasing a Company with a Qualified Plan
  • Selling a Company with a Qualified Plan
  • Correcting Qualification Failures
  • Other Qualified Plan Issues

5. Retirement Plan Coverage Issues

  • Coverage Requirements
  • How a Corporate Transaction Affects Coverage
  • Resolving a Coverage Problem During or at the End of the Transition Period
  • Qualified Separate Lines of Business
  • Interaction Between Coverage Rules and Participation Rules
  • Correcting Coverage Defects After Year-End

6. Defined Contribution Plans

  • Pensions Versus Nonpensions
  • General Defined Contribution Rules
  • Defined Contribution Pension Plans
  • Profit Sharing Plans
  • General-Tested and Cross-Tested or New Comparability Plans
  • Contributions for the Portion of the Year Before the Acquisition
  • 401(k) Plans
  • Stock Bonus Plans
  • Eligible Individual Account Plans
  • Participant Direction of Investments and Fiduciary Liability

7. Defined Benefit Plans

  • What Is a Defined Benefit Plan?
  • ERISA Title IV and the PBGC
  • Funding Considerations in an Acquisition
  • Liability or Benefit on Assumption of Plan
  • PBGC Reportable Events in an Acquisition
  • Withdrawing from Participation in a Plan Covering Controlled Group Members
  • Plan Terminations
  • Unions and Multiemployer Plans
  • Cash Balance Plans

8. Employee Stock Ownership Plans

  • What Is an ESOP?
  • Qualifying Employer Securities
  • Comparison of ESOPs with Other Qualified Plans That Hold Employer Stock
  • KSOPs
  • How a Nonleveraged ESOP Works
  • How Leveraged ESOPs Work
  • Dividends
  • Selling Stock to an ESOP: Corporate Refinancing
  • S Corporation ESOPs
  • Acquisition of ESOP Securities by an Independent Buyer
  • What Happens to the Plan: Buyer's Options for the Plan on a Stock Acquisition
  • Asset Purchases from an ESOP
  • ESOPs in Publicly Traded Companies

9. Health and Welfare Issues

  • Types of Health and Welfare Plans
  • Insured Versus Noninsured or Self-Funded Plans
  • ERISA Coverage of Health and Welfare Plans
  • Health Issues in Acquisitions
  • Welfare Plan Issues in Acquisitions
  • Continuation of Health Benefits Under COBRA
  • Obligations to Employees Under HIPAA Portability Rules

10. Executive Compensation

  • Stock Option Plans
  • Nonstock Executive Compensation
  • Taxation of Deferred Compensation Under Code Section 409A
  • Golden Parachute Issues
  • Million-Dollar Cap on Executive Compensation
  • Employment Agreements
  • Changes to Executive Compensation Under the Sarbanes-Oxley Act

11. Employment Law

  • Stock and Asset Acquisitions in the Employment Law Context
  • Due Diligence with Respect to Employment Law
  • Discrimination Issues
  • Impact of Plant Closing Laws on Mergers and Acquisitions
  • Successorship Issues Related to Union Matters
  • Family and Medical Leave Act Issues
  • Wage and Hour Issues
  • ERISA Issues in Employee Communications
  • Miscellaneous Issues

Appendix A: Benefit Plans Preliminary Acquisition Due Diligence: Checklist of Items to Review

Appendix B: Acquisition Agreement: Sample Benefits Representations and Warranties

Appendix C: Nondiscrimination Checklist and Flowchart

Appendix D: Due Diligence Work Plan

Appendix E: Detailed Due Diligence Work Program

Appendix F: Sample Due Diligence Report

Appendix G: Sample Agreement of Plan Merger

Appendix H: Health and Welfare Benefits: Checklist for Mergers and Acquisitions Issues

Appendix I: Sample Termination Agreement

Appendix J: Sample WARN Notice

Appendix K: Defined Contribution Plan Abstract

Appendix L: Compliance with the Fair Labor Standards Act As Amended

Appendix M: Murder on the M&A Express: How Benefits Killed the Deal

Appendix N: PPACA Compliance Checklist for Group Health Plans

Appendix O: Sample Qualified Separate Lines of Business (QSLOB) Notice

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