A client with a calendar year plan is contemplating terminating his plan effective 9/30/2011. When discussing the possible plan termination, the client wasn't happy that terminated participants would become 100% vested.

Now a terminated participant has resurrected herself and is adamant about rollingover her balance asap. She terminated in 2009, and is 40% vested.

Then she actually posed the question, would she get more vesting if she waits.

Since there is no plan termination amendment to vest her 100% and no guarantee the plan will terminate, do I proceed to process her distribution and forfeit the balance? or tell her to wait?

I prefer to give participants information. That gives them the power to make their own decisions (and be responsible for the results) and reduces the possibility of future complaints ("I should have been told about that!").

In answer to this participant's question, I'd tell her that terminating the plan is being considered, but the chances are about 50-50. If the plan is terminated, she would become 100% vested. She can choose to wait until September, but there's no guaranty of the termination, so she could end up simply delaying her receipt of her 40%. Then, she chooses.

For what it is worth I wouldn’t tell her anything that is just proposed and not decided.

I would add I have seen plans that in the months leading up to the plan termination amend the plan to forf everyone who is terminated. Having to wait until 5 BIS is not a protected benefit. The plan forf those people, reallocates the forf to benefit the current workers, not give the “windfall” to the former employees.