My employer (a hospital) is acquiring another company (a physician practice). We want to bring the employees of the physician practice into our 403(b) Plan. We also want to give them credit for vesting service for their time working at the physician practice, prior to our acquisition. Is there any problem with doing that? Anything that we need to be careful of?

Thanks.

I've only seen it from a 401(k) point of view, where it can be a standard feature in mergers and acquisitions. Main thing I can think of to consider is whether you only want persons in active employment who actually transfer on the date of acquisition to get service for vesting or if you want to leave it open. This controls how you word your amendment, for example, "all employees of company xyz on date _____ who become employees of company abc on date _____". If you leave out one or both of the dates, you can leave it more open. So maybe former employees of xyz could show up later and get service. Or people who terminate instead of being acquired could show up later and get service. Oh, and if the people coming over do so on several dates, then you'll have to adjust accordingly by using a date range ("oh, mr senior exec, of course we can adjust the dates because you didn't show up until 3 months later"). The main reason to make it very specific is that if a former xyz employee shows up 10+ years from now, will you be able to find the data to substantiate their prior service and how hard will that be to do ("which one of 50 boxes in archives will that be in, better pull them all".

If anyone knows of uniqueness to 403(b) that might alter what I've said, please speak up.