$3.17 interest - Non-amender

[imchipbrown]

We scrambled to get snap-on amendments signed and assets distributed before 4-30-16 PPA Restatement deadline. All participant accounts distributed and zero'ed out. Then, interest of $3.17 appears on 4-30-16. It gets swept to HCEs IRA on 5-2-16.

I'm about to file the final Form 5500. Can I file 4-30-16 final with a $3 payable, or include the $3 in benefits paid or file 5-2-16 final date? Is one automatically a non-amender on 5/1/16 if there's $1 left in the trust?

[Lou S.]

This is a good argument for restating upon plan termination.

I really don't know the answer but if it was me I'd show it as a payable and $0 balance at 4/30/16.

[Bird]

if it was me I'd show it as a payable and $0 balance at 4/30/16.

Me too. Have done it.

[Kevin C]

if it was me I'd show it as a payable and $0 balance at 4/30/16.

Me too. Have done it.

We've done final 5500s that way before, but not any more. The last two returns we did that way were selected by an IRS project looking at final 5500s. After dealing with IRS correspondence, we had to amend both returns. If you show year end assets and offsetting liabilities, taking the net assets to zero, you will probably get a letter from the IRS in a couple of years. I would file based on a final year ending 5/2/2016.

As for a restatement being due because assets existed after 4/30/16, you should discuss that with your document provider or ERISA attorney. The EOB cites Notice 87-57 in a discussion about the remedial amendment period for a terminating plan ending when the plan terminates. You should also look at Announcement 88-8, which modifies Notice 87-57 to clarify what the termination date is.

Announcement 88-8:

This Announcement amends Notice 87-57, 1987-35 I.R.B. 10, to clarify the reference date for determining the qualification requirements that plan provisions must be amended to comply with upon plan termination. For purposes of Notice 87-57, the reference date is the plan termination date designated by the employer, or other entity entitled to terminate the plan, assuming that all the conditions for complete plan termination are ultimately satisfied. ...

That's a long way of saying the plan document requirements are based on the effective date of the plan termination, not when the final assets are distributed. I remember it being discussed in prior restatement cycles and have not heard that anything changed with this cycle.

[Bird]

The last two returns we did that way were selected by an IRS project looking at final 5500s.

Oh brother, thanks for the info.

[imchipbrown]

Thanks Kevin,

That's the crux of the issue. The mighty internet is coming up blank with the references. I guess Gore hadn't invented the internet yet!

It makes sense that assets coming back from the dead can't spoil an otherwise completed Plan termination.

I'm going with 5500-SF final year ending 5/3/16.