Financial Organization Mergers and Acquisitions

Learning Objectives

Discuss key business functions to be reviewed prior to a mergerComplete an amendment mailingReview post merger tax reporting

2

Definition of a Merger

Introduction

4

Business Merger, Acquisition, or Spin-Off

Plan Merger or Spin-Off

Business Transactions Stock (or Other Equity Interest) Business Transactions2 Types

5

Mergers and Acquisitions2 or more businesses combine

Parent-subsidiary controlled group

Spin-Offs1 business entity becomes 2 or more

Business TransactionsAsset Business Transactions(Property of a business is sold or purchased)

6

AcquisitionsAll or part of a company’s

assets are acquired

Planning for a Merger

8

What questions would you need to ask before you start the merger process?

Mergers and Acquisitions

9

Different procedures for handling transactions

Need to preserve data for proper reporting

Significant effect on IRA programs

Different options available to clients

Regulatory Approvals

10

NCUA/FDIC Members/Shareholders

State law

Notifications

11

IRA Owner

Benefits of merger or acquisition

Change in trustee, custodian, issuer

Changes in contact information

Analyze Documentation Procedures

12

Review document storage

procedures

Determine forms provider

Create a plan for missing information

Obtain missing signatures

Amendments

Past Reporting and Transactions

13

Required corrections Common mistakes

Evaluate New Staff

14

Conduct procedural training

Determine staff needed to

perform key tasks

Conduct needed IRA training

Evaluate knowledge of new staff

Determine new roles

Review Processing System

15

Define ability to move data from one

system to other system

Plan for rollout and any additional programming

Determine features of each system that

are desirable

After the Merger

Notify Account Owners

• Changes in contact information• Website or portal• Change in trustee, custodian, issuer• Benefits of merger or acquisition• Actions to take

17

Amend IRA Documents

Law changes

New trustee or custodian

Document differences

Gather missing information

18

Amendment Methods

IRA Owner’s Signature Negative Consent

19

Signature

?Amendment Procedures

20

Deadline Last known address

Cover letter Required documentation

Owner named 1 of 6 children as beneficiary on previous custodian’s form, which successor accepted against policy

Accepted Beneficiary Election is Ruled ValidIn re: Estate of McNeight, Court of Appeals of Michigan

21

Days before death, told children his intent was to share assets equally

Designation on form is valid because the successor custodian accepted the form

Complete IRS Reporting

22

Standard Reporting• Both organizations file• Report based on transaction date• Acquired organization reports BEFORE• Acquiring organization reports AFTER

Combined Reporting• Acquiring organization reports ALL• Must meet certain IRS requirements • Can choose forms to report as combined• Acquiring organization must aggregate

information• File statement with IRS per Rev. Proc. 99-50

Merger Activity

23

Place the Merger Steps in Order

24

Receive approvals of outside entities

Notify clients of changes

Perform due diligence review on acquired organization’s IRA program

Evaluate IRA policies and procedures

Review IRA documents

Review past reporting for compliance concerns

Evaluate acquired staff

Determine processing system to survive

Amend documents as needed

Complete IRA reporting for year of merger10

4

1

8

5

3

9

7

6

2

Questions?

Thank you for attending

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Financial Organization Mergers and Acquisitions

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