I seem to recollect the general vesting requirements in the event of a standard plan termination as follows:

(1) All participants required to be deemed vested if the sponsor receives or expects to receive a reversion.

(2) Vesting not required otherwise (except that the normal vesting rules would still apply, of course).

Question: Is this accurate? Or, must all participants be vested no matter the other facts of the case? (i.e., standard with reversion and standard without)

I believe that potential reversion issue is applicable in a partial termination scenario, not in a standard termination.

See Regulation 1.411(d)-2.

Lots of prior threads on this topic that you should probably read. My personal opinion is that anyone who has not had a break s/b 100% vested. Some people argue 5 breaks, some say only those who were actually active at the time the plan terminated.

If you submit for approval, the IRS will probably ask about anyone who termed during the last 5 years so be ready to defend what ever your client chooses to do.

Amen to what Effen said. We've had the IRS try to apply the 5 year approach but have been succesful in arguing for a 1-year break in service approach. I think there is an old IRS memorandum (or something like that) from the national office that supported the 1-year approach. I think we hauled that out and waived it around and presumably that helped our case.

We have had success in pacifying the IRS on their the 5-yr break in service restiction-- The IRS has told me that their reason for requiring full vesting for any participant who has not yet incurred the 5-yr BinS is that the sponsor could rehire any one of those people and they would then have all their vesting restored, and should be entitled to 100% because the termination. To counter this, we have provided the IRS, on two different termination cases, a signed letter from the sponsor stating that under no circumstances will they rehire any terminated plan participant.