Guest Boston Attorney Posted December 17, 1999 Report Share Posted December 17, 1999 In a terminated defined benefit plan, has anyone ever had a problem doing a post-termination amendment specifying the allocation of surplus assets? Specifically, is there any requirement that sponsor must specify, in a plan provision or pre-termination amendment, how to allocate surplus? can't the sponsor just wait till after calculations rae made and allocate any known surplus during the post-termination period? (The Plan otherwise, by its terms, allows an employer reversion.) In the same vein, is a pro-rata benefit increase or transfer to a replacement plan under Code sec. 4980 the only way to reduce or eliminate a reversion. Any chance the IRS would somehow claim that the plan, after having frozen benefit accruals as of the termination date, "unfroze" them by allocating the surplus in the form of additional benefits and must now go thru the termination process again; re-freeze the thawed benefit accruals; give another 204(h) notice; satisfy min. funding standard for the post-termination year; etc., etc.?? Note, I think the answer is No, there's no problem here, but I m seeking input from others who've actually been through this in real life. For example, PBGC Reg 4041.8 clearly contemplates post-termination amendments to allocate surpluses; and rev. proc. 80-229 contemplates post-termination benefit increases to allocate a surplus, whether by amendment or just plain sponsor action. Link to comment Share on other sites More sharing options...
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