Identity of Interested Parties

[Guest DMc]

A client has recently requested my assistance in terminating a small 401(k) plan for a company that terminated all its employees about 3 years ago. All plan participants became 100% vested in their 401(k) accounts at that time. Participants were sent information about distribution of their account balances. Some employees responded and had their accounts distributed to them. Others did not respond, and were never heard from again. Trustees fees have been routinely charged against the remaining plan assets. By this summer, trustees fees had eaten up any remaining account balances. Board action has been taken terminating the plan and the Form 5310 is being prepared. Reg. 1.7476-1 defines interested parties in this situation to be 1) all present employees with accrued benefits under the plan, 2) all former employees with vested benefits under the plan, and 3) all beneficiaries of deceased former employees currently receiving benefits under the plan. None of those definitions seem to currently apply in this situation. Since the company has no current employees and all account balances are zero, to whom should the required notices regarding the planned filing of the Form 5310 be sent?

[Guest earthy]

If the employer terminated all of their employees three years ago, then this Profit Sharing Plan would have been terminated 3 years ago. The participants should have been immediately vested and the plan's assets distributed to the participants and their beneficiaries.

I don't think the IRS would look favorably at a 5310 form filed three years after the fact. The rules require the employer to notify the IRS of the plan's termination and receive IRS approval prior to the distribution of the trust/plan assets.

earthy

[Guest Bandb]

It seems from your definitions of interested parties that no one gets a notice. Since there was a Board action this year, I guess the members of the board can hand out the notices to each other.

earthy - what rule says you must file? Before, after or during the distribution of plan assets?

[Guest earthy]

Your right. There is no requirement that the employer has to file a 5310 upon the plan's termination.

However, if they do file, they would want to give notices to interested parties in a timely fashion.