Disposition Welfare Benefit and Code Section 125 Plans Clause Samples
The "Disposition Welfare Benefit and Code Section 125 Plans" clause governs how welfare benefits and cafeteria plans (as defined under Section 125 of the Internal Revenue Code) are handled, particularly in the context of a business transaction or organizational change. It typically outlines the procedures for transferring, continuing, or terminating employee welfare benefit plans, such as health insurance or flexible spending accounts, and ensures compliance with relevant tax regulations. This clause is essential for clarifying the responsibilities of the parties involved regarding employee benefits, thereby preventing disputes and ensuring a smooth transition of benefit plans during mergers, acquisitions, or restructurings.
Disposition Welfare Benefit and Code Section 125 Plans. All welfare benefit (health, dental/vision, life/AD&D, LTD), and Internal Revenue Code Section 125, or “cafeteria,” plans currently sponsored by TFC shall continue as separate plans after the Effective Time, until such time as ONB determines, in its sole discretion, that it will terminate any or all of such plans. As of the Effective Time TFC shall take, or cause to be taken, all actions necessary to assign any and all applicable group insurance policies to ONB and to provide ONB all necessary financial, enrollment, eligibility, contractual and other information related to its welfare benefit and cafeteria plans to assist ONB in the administration of such plans. From the date of this Agreement through the Effective Time TFC shall continue to: (i) pay the applicable insurance premiums necessary to continue the benefits under TFC’s fully insured welfare benefit plans; (iii) accrue, as an expense, in accordance with past practice, monthly amounts to be used to satisfy claims under its self-insured dental and short-term disability plans and (iii) contribute to the cafeteria plan the pre-tax amounts which the cafeteria plan participants elect to defer from compensation. As of the date of any future termination of the TFC cafeteria plan, the balances in the health and dependent care flexible spending accounts thereunder shall be transferred to the ONB cafeteria plan, and the benefit and compensation deferral elections in effect at that time shall be continued under the ONB cafeteria plan, subject to subsequent changes as provided in the ONB plan. All benefit payments related to the transferred balances shall be made in accordance with the ONB cafeteria plan.