Distributing assets prior to Determination Letter

[Guest HHR]

Employer sold all assets of company this year and terminated their Profit Sharing Plan effective as of 9/30. A request for determination of terminating plan has been filed with IRS. Plan assets have not yet been distributed... awaiting IRS approval. Employer wishes to dissolve the corporation by end of this year, 12/31/02 for tax reasons. Would this cause problems for the plan if the determination letter is not received and assets are not distributed by the 12/31/02 corporate dissolution date?

[mbozek]

Has the er thought this through? The corporate sponsor needs to continue in existance in order to adopt any amendments required by the IRS in order to terminate the plan. If there is no corporate sponsor then the amendments cannot be adopted. I think the er needs to talk to counsel about whether there can be valid corporate action under state to adopt amendments and order distributions after the corporation has been liquidated/ wound up.

[Guest Bud]

After a corporation ceases to exist, the officers of the company may continue to act to wind down the corporation's affairs. There are statutes for that in California, New York and Delaware (probably every state has it).

[mbozek]

In many corp, the officers resign when the company is closed without waiting for it to be wound up because of issues pertaining to officers liability if there is no D & O insurance. After the company ceases operation it is very difficult to get documents signed by a responsible party.