Partial Plan Terminations — Do You Have One?

What constitutes a partial plan termination? There is a rebuttable presumption that a partial termination has occurred if 20 percent or more of the participants are involuntarily terminated. The calculation is done as follows: What constitutes a partial plan termination? There is a rebuttable presumption that a partial termination has occurred if 20 percent or more of the participants are involuntarily terminated. The calculation is done as follows:

1. Number of participating employees on the first day of the plan year
2. Add to this number the participating employees who entered the plan during the plan year
3. Divide the sum of 1 and 2 by the number of participating employees terminated during the year due to employer initiated actions

For further information on partial plan terminations, please visit the IRS website.

ACR#263598 11/17