Partial Plan Termination
Updated: 09 June 2023
What Does Partial Plan Termination Mean?
A partial plan termination occurs when an employer that provides employee benefits experiences a sudden decrease in their workforce, resulting in a large part of the plan being terminated.
Insuranceopedia Explains Partial Plan Termination
Partial plan terminations are commonly defined as a 20 percent or greater reduction in the number of employees in a short period of time.
There is, however, little clarity about how this applies to small businesses. A company with only five employees, for instance, will lose 20% of it workforce if one employee quits or is downsized. Yet it would seem excessive if this resulted in a partial plan termination.
