2021 Termination, assets keep coming back

[Basically]

A single member plan that invests through Merrill Lynch made every effort to liquidate before 12/31/2021 so that the plan can be terminated.   The process started in August of 2021 and everything was rolled into IRAs.   For some reason 14 shares of an investment kept being returned to the account.  $1,900 dollars.  It left and came back and left and came back.  The advisor is saying its a ML back office problem.  He has a documented paper trail.  

I am of the mind to say the plan is terminated as of 12/31/2021.  If an issue arises later then deal with it then.  

Sound good?  Anyone ever have this problem?  

[Bird]

There's no doubt the plan was terminated, if the termination document(s) said it was. I'm confused by your tenses - "made every effort to liquidate before 12/31/2021 so that the plan can be terminated."  "Could" be?

Was it in fact terminated?

Anyway, the issue is whether to file a 5500 for 2022. If it were trailing dividends of $25 or so, I'd ignore it and file a final for 2021. For $1900 I think I'd file a 2022 return, especially since it is a "ML back office problem." No need to cover for them; they can pay for the extra fees (ha ha).

[Bri]

If the final 1099 form includes the extra 1900, then I think you're fine in showing everything "really" out by 12/31.

[Bird]

2 minutes ago, Bri said:

If the final 1099 form includes the extra 1900, then I think you're fine in showing everything "really" out by 12/31.

Good point, I kind of misread the question - got distracted and missed the main point that they were in fact distributed in 2021. I agree.

[Pam Shoup]

It may be just a "paper" position in the plan and not actual assets.  We have seen this problem when a plan has a "Worthless Investment" that shows up with the last avaiable value and someone tires to clear it from the plan, but doesn't do it correctly.  I guess that I would check to see the type of investment that it is and if it is just a paper position, the Plan Administrator may need to do a form to totally clear it from the plan. 

[Ebplans]

Termination has different meaning to different players in the retirement plan termination game.  For example, the IRS says a plan is terminated when the last penny of assets is distributed.  The final 5500's due date is related to that date. 

There is not enough information to judge or opine here but there is a good argument that the plan was terminated for IRS purposes the day that stock, if it was the sole remaining asset, 'left' the plan.  When it 'came back,' there was no plan to return to.  it could come back to a brokerage account, but not to the plan.  If the facts bear this out, there was no plan to return to.

I am not sure from the question when that moment/day occurred when all assets were paid out.  That is the year of distribution with all its reporting requirements.