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DB plan waiting for people to hit NRA


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I've got a plan that's been frozen "forever" - the plan sponsor was taken over by a multinational corporation long after the plan was frozen.  Everyone's been terminated since the late 1980s, I believe.

The plan has no lump sum feature, and payouts (commercial annuities purchased from trust assets) start at NRA of age 65.  Or, early retirement (.5% reduction per month) starting at 55.

At this point the last 5 folks are all in their late 50s / early 60s and could elect to begin payments if they want.

Unless the plan sponsor elects to terminate the plan sooner, they could potentially keep the plan open until the last person turns 65 in a few years.

If they wait, what's the typical reaction of the PBGC when you file to terminate a plan with 0 participants left?  Will they want to see X number of previous payments to participants not connected to the plan termination?  Or are they more likely to figure with no participants or assets, and the final premium payment in good order, that their file would quickly and easily be closed with the plan just going away after the final 5500?

Thanks....

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Is there another DB plan into which this plan could be merged?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I had a plan that remained open until the last person was paid.  I don't recall the PBGC having any issues with it.  I believe we sent them a letter and informed them all participants were paid, and that was it.

 

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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They probably do, although we're not privy to the details.  We're just local to this one business that eventually got swallowed up the merger/acquisition ladder years ago - US headquarters are hundreds of miles away.  Assets are fine, they just now had their first minimum due in years.  (Only about 125,000 in assets, annuities have run around 20-25k each when retirees do hit 65.)  So they shouldn't have to worry about having leftover funds.

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