Partial Plan Termination

[Guest Cookiemonster]

I have a 401(k) plan which is going through a partial plan termination.

Do the terminations have to be processed all at once, or can they be done as they come in?

Just want to be sure I follow all the guidelines.

Thanks!

[david rigby]

Terminology can be important. Exactly what do you mean by "partial plan termination"?

[Guest Cookiemonster]

There were several companies in one plan. They all had the same ownership. The one company was bought out by someone else and is completely seperated from the rest. There has been an amendment done seperating the bought out company from the 401(k).

There are about tem people that need to be paid out, and one of them is driving me crazy. That is why I want to pay them out seperately. I want to get rid of this guy.

Hope that clears it up!!!

[MGB]

Your question has nothing to do with a partial plan termination.

Your real issue here is the procedures needed to be followed in distributing benefits to a terminated participant. What does the plan say (e.g., as soon as administratively reasonable, or some stated time limit?)? What is in writing outside of the plan concerning administrative procedures?

There should be no reason why all need to be processed at exactly the same time unless you are under some time limit on all individual terminations. The partial plan termination has no effect on this issue.

[k man]

the key issue in a partial termination is vesting. that is that all the affected participants must be 100% vested.

[david rigby]

... and a "partial termination" may have occurred. In order to make that determination, more facts are needed, especially the total number of active participants in the plan (before and after the transaction).

However, not to beat a dead horse, but when you say "...seperating (sic) the bought out company...", is this merely a separation of employment, or has there been a "spin-off" (of the plan, not of the company)?