401(k) termination

[Guest Inhouse ERISA]

Once a defined contribution plan adopts an amendment to terminate, must the plan administrator wait to have all election forms before distributing assets to any participant? Another way to ask this question: If the plan (per Rev Rul 89-87) must distribute all assets within one year of termination date, what happens if some accounts are not distributed within that time period? If distributions had been made to participants within the one year time period, would they now be deemed to have been impermissible (assuing the participnat was not otherwise eligible for a distribution)?

[david rigby]

Must? not likely.

The termination process usually involves asking each participant about the distribution, "Do you want a cash payment or a direct rollover? We will make the distribution within 30 days after you respond." Thus, the late responders should not inhibit the early responders.