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Podcast 134 – What to do about your 401K in a Sale

What to do about your 401K in a Sale

In today's episode of #PoisedforExit we talked about what happens to the seller's 401K in a sale. Our expert guests were none other than the 401K experts at Trust Point; Jon Marquet and Allyson Krause

If you are thinking of selling your business, it's essential that you discuss this with the firm who manages your 401K plan well in advance of the closing, so you know the timing recommendations of when to roll over and in what instances you need to do something sooner than later. 

In an Asset sale, sellers have a little more latitude around wrapping up or rolling over their 401K plan than they do in a Stock sale. Either way, it's important to notify the firm and make a plan based on the transaction type. Jon said that the biggest issue for sellers is inaction or unawareness of the necessity to take action. Afterall, your 401K operates on its own, right? Not something you think about daily, it's just a line item on your payroll report; or so some believe. Having the expertise of a firm like Trust Point on your side means it's not on you as the seller to figure this out on your own. A simple call to let them know your intentions is all it takes, and they'll take it from there, with your input. 

We also talked about Stock sales requiring that 401K plans be dealt with before closing, but what if the deal falls through?  Allyson said that they wait until the day before the closing to terminate the plan for that very reason. If a Stock sale closing occurs and the plan is not terminated, it must be frozen at that point and the seller will have more hassle in rolling it over to another qualified plan. 

A story that illustrates the expertise and service of Trust Point recently occurred when a client was preparing for a sale, requiring that they get involved in the roll over and termination process of the plan.  Trust Point communicated the process so well to both the buyer and seller, and performed the process so smoothly, that the buyers moved their 401K plan over to Trust Point

This is an important topic we've not delved into on Poised for Exit, but it's an important one!  Please share it with your colleagues and clients. 

Listen to the episode for more on this timely topic here

Find out more about Jon Marquet, Allyson Krause and Julie Keyes here

Thank you to this month’s sponsor!  Sunbelt Business Advisors and TrustPoint

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Julie Keyes
Julie Keyes

Founder & Owner at KeyeStrategies, LLC

Julie is a Certified Exit Planning Adviser and Value Growth Advisor with 30+ years of experience. She works with business owners who seek to understand and maximize their exit and critical transition options.

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