Terminating 401(k) plan that files Form 5310 is "frozen" unt

[Guest Dook]

Can anyone give a cite to back up position that terminating 401(k)plan that files form 5310 is "frozen" until receipt of IRS approval?

Have a client that wants to continue to make distributions to terminated participants.

Thanks.

[QDROphile]

You won't find authority for your proposition because it is not true. Theoretically, nothing is wrong with continued administration of the plan pending receipt of a determination letter after termination, including distributions to those who are eligible. As part of the termination process, the plan may have been amended to provide special distribution rules and limitations. This is often done to avoid everyone one being able to receive distributions, leaving no plan to receive a determination letter (or amend, if that is what the IRS requires). Distributions can also be suspended in the process without special plan amendments for appropriate adminstrative purposes. So while it is common to suspend distributions pending receipt of the determination letter, and may make good sense, nothing in the law requires it.