Partial Plan Termination

[doombuggy]

Company is owed by two peole; they decide to seperate and one of them is going to keep the plan. They did this as of 3/31/07 and changed the company name to reflect this. Four of the eleven plan participants were let go as a result (including the one owner). The remaining owner and employees are keeping the plan.

So, I have to do an amendment to change the company name, plan name, and remove one of the trustees. Doesn't a particial termination require an amendment, or do we just generate the distribution packets when the time comes? It's been a long time shince I have done a partial termination, so I apreciate the insight...

[JanetM]

Seems to me you have done right so far if the entity sponsoring the plan is the same (just name change). Droped trustee, changed name etc. Just give distribution pkgs and ensure all are 100% vested upon distribution.

[doombuggy]

Good, thanks Janet ~ it's been awhile and I couldn't quite remember and I work at a different place, so I can't go back and look at my last one...

Thanks again!

[david rigby]

I doubt that a partial termination requires a plan amendment. However, there may be circumstances under which such amendment would be useful, especially if there is any question of who the "affected" participants are.

Beyond doubt, this situation requires some good (but probably simple) documentation in the files of the TPA, the Plan Administrator, etc.

[JanetM]

I would make it a formal amendment. We got out of a law suit after closing a plant by having amendment. We announced we were closing half the lines in one plant in March 2004. Vested all who were employed on those lines. Had about lawyer round up about 30 employees who voluntarily terminated in the few months prior to announcement and tried to sue us for benefits. He didn't get far after we sent copy of the amendment and plan doc.

[John Feldt ERPA CPC QPA]

Also, your plan document should have language already in it that may help.