This recent guidance resolves an issue that arises frequently during corporate acquisitions. As you may know, under the U.S. tax code, a qualified plan must vest all affected participants 100% in the event of a partial termination. There has always been some confusion about when exactly a “partial termination” occurs. The IRS issued guidance in July that contains a general rule of thumb: There is a presumption that a partial termination has occurred if there is a 20% participant turnover rate, but the presumption may be overcome by evidence that such a turnover rate is typical for the employer and not the result of an event such as closing of a worksite. In the example in the ruling, the shutdown of a worksite caused turnover of 23%, and the IRS concluded that there had been a partial termination. See IRS Revenue Ruling 2007-43.