Partial Plan Termination

[Guest imthatguy]

Hello

How does a partial plan termination impact a profit sharing allocation for that same plan that has a last day employement requirement? Are the participants eligible for the profit sharing due to the last day requirement being met due to termination?

[J Simmons]

No. Partial termination is only a concept for vesting.

To pass the minimum coverage test, the end of plan year employment rule might have to be relaxed to pick up some of those involved in the partial termination event that ended their employment, but that depends on how the first run of the minimum coverage test turns out.

The difference is because the vesting rules apply to already accrued benefits, while the end of plan year employment rule applies to benefits to be accrued.