Dictionary of Business Terms: termination of a plan
termination of a plan
either of two ways in which a pension plan can be terminated: standard and distress. A standard termination can occur only if the plan has enough money to fully fund the benefits or the plan sponsor agrees to pay the unfunded amount. The sponsor can choose to purchase annuities from an insurance company to cover the remaining benefits or pay lump sums to the participants. A distress termination can occur only for reasons of business necessity and is usually associated with bankruptcy.
