Horizontal partial terminations

Evolving before the passage of ERISA, the concept of partial terminations of pension plans began as a response to perceived abuses of employer discretion regarding when employees became eligible to participate in company plans and when employees' benefits, accrued under such plans, became nonfo...

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Bibliographic Details
Published inTax management compensation planning journal Vol. 21; no. 7; p. 163
Main Author Warshawsky, Laura B
Format Magazine Article
LanguageEnglish
Published Washington Bloomberg BNA 02.07.1993
Subjects
Accruals
Defined benefit plans
Effects
Employee benefits
Employees
Employers
ERISA
Excise taxes
Federal court decisions
Participation
Pension plans
Revenue Acts
Terminations
Vesting
United States > US
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Summary:Evolving before the passage of ERISA, the concept of partial terminations of pension plans began as a response to perceived abuses of employer discretion regarding when employees became eligible to participate in company plans and when employees' benefits, accrued under such plans, became nonforfeitable. Until 1991, most attention given to partial terminations focused on vertical partial termination, a significant reduction in the number or percentage of plan participants. In 1991, a Texas District Court reviewed the merger of the Gulf Oil and Chevron defined benefit plans and determined that a reduction in future accruals, a horizontal partial termination, had occurred. Since the publication of this court opinion, pension practitioners have tried to predict the nature and the breadth of the future applications of the horizontal partial termination rule. In addition, the IRS has indicated it will be focusing some of its future examination energy on horizontal partial terminations, but it has not yet issued any formal guidance.
ISSN:0747-8607