standard termination of pension plan

[Guest michael4509]

QUICK HISTORY: i am the owner of a small business with 35 employees. july of 2000 i began a new 401k plan for my employees with the intent of "rolling over" the existing plan into the new plan.

the new 401k plan, to my dismay, could not accept the "after tax" contributions for the two plans were not considered "like plans" by the IRS

the "easiest" way out of the old plan was to "terminate" the plan seeking approval from the irs...boy was i wrong.

here we are over one year later, and my first pension plan still has not released the funds on deposit with them, saying they are awaiting the "determination letter" from the irs.

THE KRUX OF THE MATTER: back in july of 2000,when the plan was to "rollover into the new 401k", i was given the choice to leave the money invested in the plan, or to put all the funds into a fixed return "money market type account." given the turbulence of the market, i chose the latter, the original pension plan complied and did just that.

in december of 2000, when i had my hand forced due to the time frame and cicumstances, i informed my original pension plan that since the "easiest" way out for me was to "terminate" the plan...i did just that and the required forms were sent to the irs.

so, for the period of july 1, 2000 - september 30, 2000 the all of the funds were invested in a "fixed income" money market account.

THE SUPRISE: less than one week ago today, because a former employee made an inquiry with the original pension plan, i was informed that the funds did not remain on deposit in a "fixed" interest account, but because of the termination proceeding that began in 12/2000, the funds were deposited back into the general stock account to share in the obvious losses suffered by most segments of the market during the period 10/1/00-6/30/00. i was never informed of this investment change by anyone at the original pension plan.

THE MILLION DOLLAR QUESTION: can this be right? were they allowed to do this? i can't believe that this is happening, and i have run out of people to talk to at the old pension plan. they just tell me, "that's the way it is. period."

thanks in advance for any insight that anyone can provide me with.