Source: http://retirementdictionary.com/definitions/employerreversion
Timestamp: 2019-04-20 11:17:54+00:00

Document:
In general, employer reversion means the amount of cash and the fair market value of other property (directly or indirectly) by an employer from the qualified plan, as a result of the amount being reverted to the employer.
in the case of any plan, by reason of the failure of the plan to initially qualify or the failure of contributions to be deductible.
A 20 percent excise tax applies to the amounts of any reversion from a qualified plan. However, this is increased to 50 percent with respect to any employer reversion from a qualified plan unless the employer establishes or maintains a qualified replacement plan or the plan provides pro rata benefit increases described in § 4980(d)(3).
Under § 4980(d)(2), a plan is a “qualified replacement plan” if it is established or maintained by the employer in connection with a qualified plan termination (replacement plan) and certain additional requirements are met. Under § 4980(d)(2)(A), in order for the replacement plan to be a qualified replacement plan, at least 95 percent of the active participants in the terminated plan who remain as employees of the employer after the termination are active participants in the replacement plan. Section 4980(d)(2)(C) provides rules for the allocation of the amount transferred.
Under § 4980(d)(2)(B), in order for the replacement plan to be a qualified replacement plan, a direct transfer must be made from the terminated plan to the replacement plan before any employer reversion, and the transfer must be in an amount equal to the excess (if any) of (I) 25 percent of the maximum amount the employer could receive as an employer reversion (determined without regard to § 4980(d)) over (II) the present value of the aggregate increases in the accrued benefits under the terminated plan of any participants or beneficiaries under a plan amendment which is adopted within 60 days before the plan termination and which takes effect immediately upon plan termination.
(III) such transfer shall not be treated as an employer reversion for purposes of § 4980.

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