|A partial plan termination occurs when 20 percent or more of a company’s employees are laid off in one year. Routine turnover during the year is generally not considered a partial plan termination.
To determine whether your turnover rate is routine, consider the following factors:
There is no requirement to notify the IRS of a partial plan termination, but all affected employees must be 100 percent vested in their account balance as of the date of the plan termination. If this hasn’t happened, a Voluntary Correction Program would be appropriate.
For more information on partial plan terminations, please contact your plan advisor.