Plan Closeout; Ongoing Form 5500 Filings

[Christine Roberts]

Section 403(B) arrangement subject to ERISA intends to "terminate." Plan maintains a group annuity and includes employer matching contributions as well as deferrals.

Is a "distributable event" other than "termination" of the arrangement necessary for each participant to roll out of the group annuity and into an individual annuity or custodial account?

If so, is the employer obligated to continue filing Form 5500 Return/Reports until the last participant in the arrangement experiences a "distributable event" and moves his or her money to an individual annuity?

OR can each participant make a trustee to trustee transfer out of the group annuity, to an individual annuity, irrespective of plan termination or any distributable event? (Hence allowing employer to cease reporting duties much sooner.)

[Carol V. Calhoun]

It would appear to me that you would not really need a rollover, so long as the carrier would agree to separate the group annuity contract into individual contracts. This would appear to be more like a plan-to-plan transfer, which is permissible even without a distributable event so long as all of the 411 rights are preserved. And once the individual contracts have been transferred to the employees, the Form 5500 obligation should go away, as it would in the case of a terminated qualified plan after the benefits had been provided for through annuities. However, as with so much in this area, there is no definitive guidance.