The IRS ruled that departing employees of corporations that sell any part of a business can roll over their 401(k) plans into their new employers plan or an IRA. IRS rules already permit companies to give employees their retirement dollars when they sell all or substantially all of the assets of a business, or when they dispose of a subsidiary.
The new ruling will allow companies to let employees of a divested business roll over their 401(k) assets into their new employers retirement plan or into an IRA, even if they sell less than 85% of the business assets to another corporation. Selling corporations frequently do not let employees of a divested business pull out their money from 401(k) retirement plans for fear of violating IRS regulations.
The ruling does not address situations where the buyer or the seller is not a corporate entity.