A company is being sold and the new company is going to sponsor the exisiting plan. The plan is eligibility provision will be amened to exclude a division.

[Guest mmc]

Amending a plan to eliminate a division will affect employees already participanting. I know the right to continue to participate is not a protected benefit, but the accrued benefits are protected. The plan sponsor wants these participants to take distributions. Is there a distributable event? As long as these participants are employed they will continue to vest in their accrued benefits even though their participation is suspended.

Does the fact that the plan sponsor has changed affect their status?

[g8r]

If they are still employees, I don't think that amending the plan to exclude them creates a distributable event. It's no different than a plan that excludes union employees. If someone changes to union status, the employee is no longer entitled to additional benefits but continues to vest, etc. and doesn't have a distributable event.

[david rigby]

Much depends on the precise nature of the "sale", and the precise nature of the employment relationship. (Sometimes words like "sold" or "merger" are used a bit too casusally, and may imply an inaccurate result.)

If a stock sale, then likely not a distributable event.