johncerten

This is an interesting situation. A partial termination analysis would depend on the specific facts, including the plan document, the number of participants affected, and whether the change from employee to independent contractor is considered a severance of employment under the plan and applicable rules. Since the part-time employee has been receiving profit sharing and has an existing vested balance, it would be important to determine whether this transition is a legitimate change in employment status or effectively a termination. If the employee is no longer eligible to participate, the reduction in active participants may need to be reviewed for possible partial termination implications. I would recommend reviewing the plan provisions and consulting with a qualified retirement plan professional or ERISA counsel before making the change.