Archimage Posted November 19, 2003 Share Posted November 19, 2003 I have an employer whose practice has ceased operations in order to dissolve. All employees and operations are terminated other than the owner/shareholder. The company is still in legal existence although the only operation still happening in existence is the collection of A/R. Does anyone know of guidance that would suggest the plan terminates when the practice theoretically ceased operations? Link to comment Share on other sites More sharing options...
QDROphile Posted November 19, 2003 Share Posted November 19, 2003 I really doubt you will find any authority for that proposition. You might have better luck with authority that the plan terminates for tax purposes when the trust distributes all assets. Link to comment Share on other sites More sharing options...
ljr Posted November 19, 2003 Share Posted November 19, 2003 Since the entity still exists, it should probably document the plan is terminated as to all contributions as of xxxxx date and intends to distribute to participants ASAP. A 5500 needs to be filed as long as the plan holds any assets. Link to comment Share on other sites More sharing options...
chris Posted November 20, 2003 Share Posted November 20, 2003 As referenced above, have the dircetors of the corp. sign off on a consent terminating the plan as of date x in preparation for the subsequent dissolution of the corp. Consider submitting the plan to the IRS, if need be. Keep Rev Rul 89-87 in mind in terms of distributing assets as soon as administratively feasible so the IRS does not disregard the termination and treat it as an ongoing plan. Link to comment Share on other sites More sharing options...
Archimage Posted November 20, 2003 Author Share Posted November 20, 2003 No resolution has been formally adopted. Link to comment Share on other sites More sharing options...
mbozek Posted November 20, 2003 Share Posted November 20, 2003 The question is terminated for what purpose? Employer can terminate plan operation at any time by adopting board resolution. Plan is not terminated for IRS purposes until all assets have been distributed. See Rev. rul 69-157. mjb Link to comment Share on other sites More sharing options...
Archimage Posted November 20, 2003 Author Share Posted November 20, 2003 I think we are getting off subject. Basically the business has ceased all operations. All employees were terminated early this year other than the owner but is no longer drawing a salary. No resolution has been made to terminate the plan. The employer wants to get a contribution for this year. I was curious as if the IRS has ever ruled that a plan was terminated due to company operations ceasing. I want to make sure that it is okay to give all of the contribution to the employer. Since all NHCEs terminated with <500 hours I do not have a coverage problem. A formal resolution will be adopted some time next year. Link to comment Share on other sites More sharing options...
KJohnson Posted November 20, 2003 Share Posted November 20, 2003 I don't think you would have an issue on whether the plan terminated. I assume that the reason the owner gets a contribution and nobody else does is that you have a last day rule (and you haven't put such a provision in the Plan in anticipation of this event creating a possible discriminatory amendment under 401(a)(4)). I think your issue would therefore be whether the owner was "employed" on the last day. I would think that if you continued to pay him comp for his duties in the wind up you would be home free. Based on the facts that you presented, I think you have a closer quesiton. Link to comment Share on other sites More sharing options...
Archimage Posted November 20, 2003 Author Share Posted November 20, 2003 That is one of my concerns however he will be getting paid a bonus at year end so that squelches some of my concern. Link to comment Share on other sites More sharing options...
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