Have any of you had to notify former employees of the 100% vesting because of partial plan termination?  If so are you willing to share your letter with me?  Thank you in advance.

 

 

our plan was put in partial plan termination this year as well and we did not notify former employees.  We just made anyone that terminate from the begining of the plan year vested at 100%. Those that cashed out or rolled their money out already were sent another check for the difference.

We agree, there is no specific notice requirement when a 401(k) plan has a partial termination. But because the tax consequences of failing to provide 100 percent vesting to employees effected by a partial termination are dire, it is important for employers who are having a reduction in force to be familiar with what constitutes a partial termination. Internal Revenue Code Sec. 411 does not specifically define the term, but the Internal Revenue Service has provided guidance on its Web site at http://www.irs.gov/retirement/participant/article/0,,id=151798,00.html

Additional more technical guidance can be found in IRS Rev. Rul. 2007-43 which can be accessed at http://www.irs.gov/pub/irs-drop/rr-07-43.pdf