FIS Relius

Partial Termination and Plan Termination
Tuesdays with Derrin and Steve

In today’s difficult economic market, smaller workforces are the standard. An often overlooked requirement that may be triggered with a downsizing is the partial termination rule. You can be sure the IRS is not overlooking the rule. They monitor the issue carefully through the Form 5500. A failure to comply with the requirement will result in a qualification failure and an expensive correction. A plan that doesn’t apply the rule correctly will have to make a corrective contribution to those participants who were improperly forfeited, and probably will have to pay a sanction to the IRS. The statute indicates that it is a "facts and circumstances" test but the IRS has provided guidelines and presumptions.

This program also addresses the necessary steps to terminate a plan and the consequences of a plan termination. Practitioners generally know that the plan needs to 100% vest participants upon plan termination. However, many practitioners are unaware of how far back a plan must go in vesting participants. The speaker discusses the necessary amendments that need to be adopted upon plan termination, and using case studies, he demonstrates how to apply the rules.

• Partial termination presumptions
• Turnover rate
• Employer initiated terminations
• Vesting on plan termination
• Plan termination steps
• Plan termination amendments
• Determination letters
• Personnel records

Prerequisites: There are no prerequisites or advance preparation for this program.

Instructional Delivery Method
Group - Internet-Based

Speaker: S. Derrin Watson, J.D., APM
Recipient of ASPPA's 2006 Educator of the Year Award

Objectives: After participating in this program, an attendee should be able to:

1. Analyze whether a partial termination has occurred
2. Determine the plan’s turnover rate
3. Identify when a plan can overcome IRS presumptions regarding partial termination
4. List the steps to terminate a plan
5. Identify the consequences of plan termination
6. Determine which participants must be vested on plan termination
7. Correct a failure to vest upon partial termination
8. Determine when to apply for a determination letter for a partial termination or a plan termination

Hardware System Requirements: 

• Windows 95, 98, NT 4.0, 2000, XP, Windows 7
• Internet Explorer 4.01 or later, Netscape 4.08 or later, and set Internet browser to allow pop-up windows.
• High-speed Internet connection.
• Pentium 166+ MHz, 128MB RAM or more.
• 1023 x 768 or higher display resolution.
• Soundcard and Speakers.

Software Requirements:

• Silverlight Version 4 is required. Silverlight Version 5 or higher is preferred.
• Silverlight 4 System Requirements Information: http://www.microsoft.com/getsilverlight/locale/en-us/html/installation-win-SL4.html
• Silverlight Downloading:
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  • If you don't see the pop-up window, or if you wish to install this application before you access the recording, you may download it from this location: http://www.microsoft.com/getsilverlight/get-started/install/default.aspx 
• If you have questions or need assistance with accessing/downloading Silverlight, please contact your IT or MIS department.

Program related requests, questions, or concerns may be emailed to: relius.education@sungard.com.