Submitting a terminated plan to the IRS (Form 5310)

[John Feldt ERPA CPC QPA]

The date of plan termination was established for a small qualified plan in May of 2011 and all benefits were officially paid out in July of 2011. It's a DB plan on a prototype but not subject to PBGC coverage. The plan was effective in 1999.

The plan sponsor comes back now and says, I know I told you in writing that I don't want to spend the money to submit to the IRS, but could we go ahead and submit now anyway?

Would the IRS actually accept a 5310 more than 12 months after the official DOPT?

[david rigby]

Might be prudent to ask what new information has changed his mind?

[John Feldt ERPA CPC QPA]

We had outlined everything in our initial plan termination correspondence, describing the issues that get left open without applying for a determination letter upon plan termination, and we explained the only way to ensure those items aren't open for later scrutiny upon audit is to apply for a determination letter, etc.

That never really sunk in for the owner until he recently talked to a retired colleague and found out what had happened with their plan. After that, he had trouble forgetting that conversation and he got worried any time he did anything with his rollover IRA. Thus the call back. Personally, it does not appear that his plan has any terrible issues like the one he described from his colleague, but now I am curious about this "is 12 months later too late to file" question.

My recollection is that a 5310 application can be filed no later than one year after the effective date of the plan termination. I'm looking into Rev Proc 2007-44 to see if that changes anything.

[John Feldt ERPA CPC QPA]

Rev. Proc. 2007-44

SECTION 8. PLAN TERMINATION

The termination of a plan ends the plan’s remedial amendment period, and thus, will generally shorten the remedial amendment cycle for the plan. Accordingly, any retroactive remedial plan amendments or other required plan amendments for a terminating plan must be adopted in connection with the plan termination (that is, plan amendments required to be adopted to reflect qualification requirements that apply as of the date of termination regardless of whether such requirements are included on the most recently published Cumulative List). An application will be deemed to be filed in connection with plan termination if it is filed no later than the later of (i) one year from the effective date of the termination, or (ii) one year from the date on which the action terminating the plan is adopted. However, in no event can the application be filed later than twelve months from the date of distribution of substantially all plan assets in connection with the termination of the plan. See section 14 with respect to the Service’s review of an application for a determination letter with respect to a terminating plan.

How do you interpret the bold section above in context with the prior sentence? Would an application done now be rejected, or because the assets were paid out less than 12 months ago, would it be okay to submit?

[ETA Consulting LLC]

In some odd event that everyone was entitled to an in-service distribution and actually took one; all assets would be distributed prior to the plan actually terminating. I think that is what the bold lettering implies; there actually being distributions prior to the amendment to terminate the plan. I do not believe that gives you extra time.

Good Luck!

[Mike Preston]

I have submitted plans more than one year beyond their termination date and received letters of determination. I have not submitted plans more than one year beyond the date where substantially all of the assets have been distributed from the plan.

Chop chop, it looks like you have until July of 2012 to submit. Hippity hop.