Merger and Partial Plan Termination

[PMC]

Employer A was a controlled group member with Employer B under Plan #1. Controlled group no longer exists and Employer A wants to establish their own plan and spin-off the assets attributable to Employer A and merge them into their new plan. Employer A workforce is aprox. 40% of A & B. Plan #1 will still exist for Employer B.

Do you think this would be a partial plan termination requiring 100% vesting in Plan #1 for Employer A's participants? Or given the fact they are merging their portion of Plan #1 into their new plan, and vesting can continue for them, they don't have to vest them 100%.

[MoJo]

I don't believe so. In this case, there really is no termination affecting rights under the plan (i.e. there is no "new plan" into which the old assets will be merged into). In this case, its merely a split-off of one plan into two, with each portion covering the respective employees.

[david rigby]

I agree. I don't think a spin-off would give rise to a partial termination.