Partial Plan Termination and 5500-SF

[Gadgetfreak]

A Plan had a PPT in 2014. Per IRS, all affected participants became 100% vested,

I have read several articles that speak of "red-flags" with the 5500 - one of them being if there were a lot of terminees.

Question: I don't see anything on the 5500-SF to indicate a PPT. If so, and the IRS sees decreased participants, where do they also see that it was a PPT and everyone became 100% vested?

[Lou S.]

If the number on Line 6(h) of Form 5500* is "high**" then that might cause the IRS to question whether a partial term has occurred. If the participants were 100% vested because you deemed a partial term to have occurred then they would not be included in the line 6(h) count, in my opinion.

*Line 5(e) on Form SF.

**typically more than 20% of participants.

[Gadgetfreak]

That makes sense. But 5(e) is new for for 2014. I wonder how it was handled in the past. Thx.

[Lou S.]

That makes sense. But 5(e) is new for for 2014. I wonder how it was handled in the past. Thx.

I'm not sure. The question used to be on the form but was removed at some point and added back this year.

edit

And by "used to be" I mean it may predate the SF and date back to the old C/R cycle forms.

[david rigby]

Don't look for trouble. You've identified this "event", and done the only thing necessary: award 100% vesting to affected participants. (Of course, all such participants get treated just like any other VT under the plan, which may or may not be a distributable event.)
You're done.


BTW, don't ever assume that a "partial termination" is really a "termination". For all practical purposes, the only issues are vesting and documentation.