I have a 1-person Keogh (sole proprietor) plan, not covered by the PBGC. This is a Fidelity Prototype plan. Normally, for a DB plan termination, we amend the plan document and submit to the IRS for a determination. I am assuming that Fidelity handles thousands of this type of plan and is equipped to do this.
1) I am planning on instructing our client to tell Fidelity to terminate this plan (since that is his wish) - I am assuming that this is all that I need to do for the termination (except for (2) below)? Anyone have any experience with this?
2) The owner is looking to roll the money into an IRA. What happens if the present value of the accrued benefit is 1) overfunded, or 2) underfunded? If underfunded, it would seem silly for him to contribute money in order to fund the plan just to get it right back. If overfunded, are there any problems?
Thanks for any input.
