BenefitsPerson
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Amend the prior 5500 to indicate that it is a final return. Include an attachment that says the plan is not covered by ERISA and no further filings will be made. I had this situation before (about 4 years ago) and this is what the DOL told me to do. We never had a problem with the DOL since.
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You can amend the plan to provide for an in-service distribution. Normal income taxes and the 10% pre-59 1/2 penalty would apply. You would need to figure out where the money for the taxes will come from.
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You don't even get to the leased employee question until you first ask is the leased employee really a common law employee. You will almost never see a 10% MPP for leased employees.
