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Store closing & Partial Plan Termination


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A large plan is selling one of its stores, the number of affected participants is 20, the total number of participants is 230. I know the rule of thumb is 20%, however, in this case, since the ER is selling the store, what are the chances of this being a partial termination? Since the ER is the one initiating, I am tempted to to call it a partial term to be on the safe side, any thoughts?

Thanks!

Jason

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Maybe the sponsor wants to make all the employees of that store 100% vested and if so the plan can be amended to do so.

Since the partial termination is a subjective item and 20% is a rule of thumb, I think this is not your call, it is the sponsor's call.

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Maybe the sponsor wants to make all the employees of that store 100% vested and if so the plan can be amended to do so.

Since the partial termination is a subjective item and 20% is a rule of thumb, I think this is not your call, it is the sponsor's call.

Yes, I do agree, not my call, I will discuss the options and such with the ER and let him make the final call. Thanks!

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I agree w/ rcline46. It's probably not a partial termination, but the sponsor has the option of being more generous. Although not likely, watch out for any resulting discrimination. If in doubt, the sponsor should contact its ERISA counsel.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Guest Sieve

I understand the concept, but if, by law, this does not rise to the level of a partial termiantion, wouldn't fully vesting those individuals be a cutback for those who would otherwise be sharing in their forfeitures?

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...wouldn't fully vesting those individuals be a cutback for those who would otherwise be sharing in their forfeitures?

Do we know that the plan says that?

Do we know that this is a DC plan?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Guest Sieve

rcline --

I would agree with you (i.e., forfeitures have not yet occurred so there can be no cutback) if the employee terminations of employment are in the future. But, if the store already has closed, and terminations of employment have occurred, then amending the plan to fully vest those individuals could raise a cutback issue (based on document language).

And, a non-discriminatory action is a compeltely different issue from cutback. For example, if we amend a plan mid-year to add an allocation provision for the year (such as end-of-year employment) that applies to everyone, or no longer permit in-service distributions at age 59-1/2, then the non-disriminatory nature of the amendment does not eliminate the potential for a cutback. They are compeltely different animals.

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