I have a client that has sold his practice (not his Corp) with 4/30/07 effective date. His employees will be working for the new DDS and the new DDS is not taking over the retirement plan. The retirement plan will remain open so our client can continue to fund for himself going forward.

Question: I know the participants become 100% vested due to partial termination but do they get paid out as of 12/31/2006 valuation or is an interium valuation required as of 4/30/07?

Thanks!

Under the terms of the plan, did the participants accrue additional benefits during 2007 before the plan was frozen/terminated?

No, they did not. Plan has 1,000 hours and last day rule and we have advised the client not to make a contribution for 2007 for himself so not to run into coverage and required contributions for 2007.

My prior post was quite poorly worded.

Your response gives the impression that we are dealing with a profit sharing plan.

With respect to the allocation of additional earnings, I would treat the former employees as any other terminated employee under the terms of the document.

Thank you! Actually I could have been more specific too - instead of saying retirement plan - I should have said Profit Sharing Plan! For some reason to pay out participants affected by a partial termination based on 12/31/06 val didn't pass the "smell test" for me.