Partial Plan Termination

[DP]

I have a medical practice that consists of 6 docs and 43 staff. They started having financial problems this year and four docs quit. Two part-time employees (who were participants) quit this month since they were given an ultimatum of going full-time or quitting. I heard today that 1/2 of the staff will be laid off in November.

I'm aware this would result in a partial plan termination, but what about the two part-time employees who quit in August? Would they become 100% vested due to the partial termination?

Thanks.

[david rigby]

Facts and circumstances. Given the statements as presented (still to be determined if they are facts), IMHO, the answer is “probably”. But circumstances change; difficult to determine in advance, and without more information.

Several prior discussion threads on this topic. You might try reviewing:

http://benefitslink.com/boards/index.php?a...ation%26quot%3B

[stephen]

I have seen this type of scenario argued both ways- The two employees terminated in August could become 100% vested or could be excluded from the 100% vesting depending on the attorney for the plan. Thus, my suggestion would be to refer the quesiton to the ERISA counsel for the plan.

[MGB]

Prior to referral to an attorney, how about a reality check?

How much would it cost (remember there is also some goodwill) to vest them? How much would it cost to pay the attorney fees to look at this?

Somehow I think going the vesting route makes a lot more sense, even if you don't have to. Especially when the legal opinion should be "we can't tell without filing for a ruling from the IRS."

[DP]

With a partial termination, who all becomes 100% vested? Only the terminating participants - or all participants?

Thanks.

[david rigby]

Only "affected" participants. That means those who are affected by whatever action/transaction gives rise to a partial termination.