Partial Plan Termination?

[Guest Anne D]

Company A sells off a division. As a result, about about 35% of Company A's 401(k) plan participants terminate with Company A and are employed by Buyer. Their plan assets are transferred to Buyer's plan. Buyer's plan will count the service of former Company A employees for purposes of vesting and eligibility. Is there a partial termination of Company A's plan such that the affected employees must be 100% vested, or does the continued counting of service suffice? Does it matter that Company A and Buyer were related before the sale such that the affected employees remain within the same control group after the sale? Citations helpful. Thanks.

[This message has been edited by Anne D (edited 07-12-99).]