In Brief

IRS RULES ON PARTIAL TERMINATIONThe Internal Revenue Service ruled that a partial termination of a qualified plan occurred where 23 percent of a plan's participants were no longer active due to the closing of one of the employer's four locations. Therefore, all plan participants were fully vested.

Under Code Sec. 411(d)(3), a plan is required to provide that, upon its partial termination, the rights of all affected employees to benefits up to the date of the termination must be non-forfeitable.

The IRS ruled that if the turnover rate is 20 percent or more, there is a presumption that a partial termination has occurred. The IRS determined the turnover rate by dividing the number of participating employees who had an employer-initiated severance from employment during the applicable period - in this case, the plan year - by the sum of all of the participating employees at the start of the applicable period and the employees who became participants during the applicable period.

The 20 percent threshold merely creates a presumption, according to the IRS. Facts and circumstances indicating that the turnover rate for an applicable period is routine - and not the result of a shutdown - favor a finding that there is no partial termination.

The IRS also noted that a partial termination of a qualified plan can also occur for reasons other than turnover. For instance, a partial termination can occur due to plan amendments that adversely affect the rights of employees to vest in benefits under the plan, plan amendments that exclude a group of employees who have previously been covered by the plan, or the reduction or cessation of future benefit accruals resulting in a potential reversion to the employer.

H.D. VEST TOPS $5 BILLION IN ASSETS

Broker/dealer H.D. Vest Financial Services said that its assets under management in advisory accounts recently passed the $5 billion mark. The company said that figure helped propel its total assets under management to roughly $25 billion. The company currently supports over 1,900 independent advisory consultants in its system of 5,500 advisors.

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