Partial Terminations

[BTG]

Revenue Ruling 2007-43 clarified that both vested and non-vested participating employees are taken into account for the partial termination calculation. Is it safe to assume that participating employees means that only active participants are taken into account? It would seem to me that such an interpretation is more in keeping with the spirit of the rule.

[jpod]

What do you mean by "active"? For example, if a db or mpp plan is frozen, but employees still receive vesting credit as required by law, would you consider them to be not "active"? Certainly in that situation you have to count those participants in determining whether there is a partial term. of the frozen plan.

[BTG]

By "active," I was referring to current employees who participate in the plan. I agree with you that employees with frozen benefits who continue to receive vesting credit would have to be included.

I am wondering if participants who are former employees are counted in the denominator of the turnover rate fraction.

[AndyH]

A further question in my mind is: Does an active participant include someone who is an active participant for 5500 purposes, i.e. including term non vesteds who have not incurred a break in service or a deemed cashout under the terms of the document?

[Blinky the 3-eyed Fish]

Logically why would you include someone in the denominator who has no chance to be included in the numerator? It doesn't make sense to do that and by doing so you are watering down the fraction. I can't see arguing the determination is made any other way than considering active (i.e. people employed) participants.

[AndyH]

Quite logical Mr. Spokfish. Live long and prosper.