By Stephen Korving

There has been a lot of discussion in the media and among employees what the sale of Smithfield Foods to Shuanghui International Holdings will mean for Smithfield employees.

Corporate acquisitions can be a nerve-wracking experience for the employees. There may be meetings where big decisions are being made that you’re not privy to. A general feeling of uncertainty feeds anxiety as workers worry about changes to their jobs, how benefits may change, or even layoffs.

Regarding company retirement savings plans, sometimes their merging occurs in the open, but most of the time the details are worked out in private among the new company officers.

In the case of Smithfield, the Chinese view of retirement savings is undoubtedly different from the way Americans view it. While Shuanghui ships its products internationally, it is essentially Chinese, as are most of its employees.

We would be surprised to see any changes in the very near future. Retirement plans are not usually a priority that is discussed when two businesses consolidate and are usually not addressed until after the deal is done.

But what usually happens when the retirement plan is discussed? When an employer is sold or merges with another company there are three common outcomes concerning the 401(k) plan:

4Plan may continue.

4Plan may be merged with the plan of the new corporate entity.

4Plan may be terminated.

If the plan continues to operate, and you are allowed to continue making contributions, it will remain the 401k plan you are already familiar with. In that case, you should continue making contributions.

If the plan is merged, you may see features and investments retained from your old plan, or you may see totally new ones. Generally retirement plan mergers take some time as the benefits department figures out just what the new plan’s investments, rules and features will be.

There may even be a “lock out” period if the plan switches providers or record keepers. Your contributions will continue, but you aren’t allowed to take a loan or a withdrawal or pick new investments. When plans are merged, employers usually keep their employees informed.

If a plan is terminated, one of two scenarios will generally take place. The first is that the plan is shut down and all of the assets are distributed to the participants. If this takes place, we recommend that employees roll those assets into an IRA.

The second, and more common, scenario is that the plan continues on, but new contributions are not permitted nor are assets distributed. Employees are allowed to make changes to their investments and withdraw funds when they retire or switch employers.

Stephen Korving is a financial adviser with Korving & Company, Suffolk. For information, visit www.korvingco.com or call 638-5494.