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Standard PBGC Termination - Timing of Amendment/Resolution


emmetttrudy

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My understanding has been that the plan termination resolution and plan termination amendment must be signed before (or same day of) the NOIT is distributed (60-90 days prior to plan's termination date).

Someone had mentioned to me the other day they thought that as long as the NOIT was distributed timely that the resolution and amendment could be signed all the way up until the plan's termination date.

I called the PBGC to ask them this and they said it was the first time they had ever been asked this question, but their opinion was it made sense for the resolution and amendment to be signed before (or day of) the NOIT was distributed.

Any thoughts or has anyone seen the various deadlines spelled out somewhere official? The standard termination instructions don't seem to specify.

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Just wondering - if no formal action has been taken to terminate the plan, how can a NOIT be issued? What happens if the Board votes against terminating the plan? NOIT or no NOIT, it would not be a recission of a plan termination. Without formal action, is an unsupported but issued NOIT sufficient to confer full vesting on the plan participants? If a plan termination commences but falls through, the full vesting sticks.

Not a very good idea, in my opinion.

Always check with your actuary first!

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  • 4 weeks later...

I have some very old worksheets that say nothing more than what has been said above:

1) The resolution terminating the plan must be signed no later than the proposed termination date (this only works, of course, if the plan has previously been frozen in accordance with 204(h)).

2) The NOIT must be issued at least 60 and no more than 90 days before the proposed termination date.

At the time, my research didn't find anything formal directly on point. But I did find that the following statement was included in my research: "However, many advisors counsel their clients to have this signed before the NoIT is distributed."

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Here's a link to a file that I've been using for over 11 years. There have been some minor updates to the rules since it was published, so everything should be double-checked. Let me repeat: it may be out of date in some respects so make sure you double-check EVERYTHING.

https://dl.dropboxusercontent.com/u/4185297/Termination%20Date%20Deadlines%20v2.01.pdf

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