Terminating a Multiple Employer Plan During a DOL Audit

[djhpro]

Client had decided to terminate its Multiple Employer Plan which has been undergoing a DOL Audit for 2 years.  Reason for terminating is unrelated to the audit.  Is it advisable to proceed with termination during an open audit?  Any potential ugliness if proceeding before the audit is closed?

[Madison71]

Plan Sponsor can prepare board resolution to terminate the plan, but I wouldn’t distribute all the assets until the audit wraps up.  Are they planning on filing a 5310?  Assets have to be distributed as soon as administratively feasible after termination, but waiting for the audit to wrap I think is reasonable.   Sponsor could also just freeze if concerned audit going into perpetuity.  Ceasing contributions for 2-3 years would be equivalent to a plan termination.  I don’t think you can prevent  the participating employers from distributing assets and filing their final Forms 5500 during this time if plan terminates.