Generally, the facts and circumstances in a particular case determines whether a partial termination has occurred. The facts and circumstances that are usually considered include:
- The exclusion ( by reason of a plan amendment or severance by the employer) of a group of employees who have previously been covered by the plan; and
- Plan amendments which adversely affect the rights of employees to vest in benefits under the plan.
Under a defined benefit plan, if the plan ceases or decreases future benefit accruals, a partial termination may occur if the change results in a potential reversion to the employer, or employers.
IRC § Treas Reg §1.411(d)-2(b), Rev Rul 72-439, Rev Rul 81-27
Additional Helpful Information
If a termination of a qualified plan occurs, participants affected by the partial-termination may become 100% vested in the plan