The ABC Company has a 401(k) PS Plan. The company is sold to John Smith as an asset sale. John wants to keep the plan intact.

What is the best option?

For whom? Do buyer and seller want the same outcome?
Need more facts.

2 things to consider: the buyer in an asset sale can assume the plan by formally agreeing to be the plan sponsor; review the plan document to see how it defines "severance from employment". You want to make sure that the transaction is structured so it is not considered a severance from employment of the employees in the sold company, as severance from employment would entitle them to be paid. [I get confused trying to remember how the severance from employment rules work in this situation - but the plan document should say - if it's a prototype there's probably a section where this definition is established.]