Partial Termination

[Guest Kevin1]

Two dentists cost share employees and office space on a 50/50 basis. Each dentist works two days a week while the employees work 4-two days per week for each dentist. Dr. A decides to move her practice to another local office. Of the four eligible shared employees, she offers two employment at her new office for three days per week (and maybe four days). These two declined the positition. The other two eligible employees were not offered employment at the new office.

With regard to the later two, I think a partial termination has occured and 100% vesting is in order. With regard to the former two I'm leaning towards no partial termination. They were offered a continuing job with their employer Dr. A. working 3 days at the new office. They declined and therefore it was not the employer action that resulted in their termination of employment from Dr. A but the employee's refusal of the position. Looking solely at Dr. A, the employees worked 2 days a week for her before the split up and at the new office it would be 3 days. The employees need 4 total days of employment to pay their bills.

But, how does Dr. B come into play? Let' say she is unable to "pick up the slack" and keep the employees employed 4 days per week and they have to go to a completely different office in order to maintain their income level. Then Dr. A's action resulted in their termination also.

Thanks

[Guest Pensions in Paradise]

I would make the agrument that Dr. A's actions did result in a partial termination for all employees. Even though Dr. A offered two employees positions at the new office, the employees could say they refused the positions because the new office is located too far from their homes, or in a bad neighborhood, etc. The bottom line is that the two employees will no longer be working for Dr. A because of some action taken by Dr. A (i.e., moving office locations). An extreme example is Dr. A is currently located in California, and decides to move to New York.

[JanetM]

Maybe I am reading too much into it... What kind of plan and who is the plan sponsor? Are the doctors both sponsors? Does one doctor sponsor and the other sign on as participating empoyer? Are these employees getting W-2 from each doctor? Or single W-2 from third entity we don't know about like a partnership or leasing company?

[Guest Kevin1]

Thanks for your in put.

No real difference in office loaction either geographically or neighborhood. New office is just down the street. They are in a cost sharing arrangement, separate w-2s, separate checks. They are two unrelated employers except for shared expenses including employees. Each dentist sponsors a 401(k) profit sharing plan. Separate investment accounts for each participant under each plan. Each employee is separately employeed by each of the dentists. Dr. A is offering continuing employment at a different office loaction. No different than you or I moving our office a couple of doors down. Yes, if she had moved to New York, 100% vesting

If we focus on Dr A. The employees work 2 days a week for her. They would work 3 days at the new office. Therefore, they would be working more days for Dr. A than before. However, they currently work 4 days split between both docs.

If our position is that each dentist is a separate employer, then the two days working for Dr. B are irrelevant. Or is it? The employees look at as a package deal. 4 days is 4 days.

Or, if Dr. B picks up the slack and is able to employ the employees for a total of 4 days can you argue that the employees need 4 total days of employment, Dr. A was unable to offer this and the employees had to stay with Dr. B. because she could offer 4 days. (I doubt that Dr. B will immediately be able to offer 4 days). Dr. As action resulted in termination of employement and therefore 100% vesting.

[JanetM]

My opinion on A would be. They are totally separate employers and Bs actions don't affect the outcome.

There were 4 employees at A.

A made change in office location.

Two employees didn't take up offer of working in new location - consider those voluntary terminations.

Two employees were terminated as they were not offered positions in new office.

As the two terminated make up a LOT more then 20% of workforce they would be vested. Seems to be a gray area on the two who volunarily leave. Why not just vest them and get on with life? Isn't like it will cost A any money out of pocket since the money has already been pait to plan. Yeah you can say that it reduces the forfeiture amount allocated to remaining participants but is that a reason to not vest them?

[Guest petrojelly05]

of course....