Excess Assets

[Dougsbpc]

A small non-pbgc plan terminates December 31, 2010 with benefits that are slightly less than the value of assets. The plan was to allocate plan assets per ERISA 4044. They are now ready to distribute but have had an unexpected major increase in the value of plan assets within the past month and now have excess assets of about $30,000.

They would like to allocate excess assets in a non-discriminatory manner rather than pay the 50% excise tax. However, it is now after the plan termination date. Is it possible to have them adopt an amendment allocating excess after the termination date? We will be applying for a determination letter soon but don't want to wait to distribute benefits.

Back about 10 years ago we had a similar scenario and the IRS let the plan sponsor adopt an amendment allocating the excess.

Anyone have any experience with this?

Thanks.

[david rigby]

I've done this before (although not in the last 10 years). Since we were changing from "excess reverts to ER" to "excess is allocated to EES", we didn't bother asking anyone's "permission", just amended the plan to change the existing plan language on what to do with any excess assets.

Just remember that 411(d)(6) protection applies to the amendment.