Abandoned/Orphan Plan?

[Guest Retina]

Situation is this: a DC "plan" (I use this term loosely) was established in the late 90's by a dot-com ER. It does not even have a plan document so obviously no determination letter exists or was applied for, although there is a formal trust document with basic terms for ER contributions. The ER made about a year's worth of contributions to a bank account set up for the trust but then went belly-up soon thereafter. Former EEs recently reappeared and want funds, but the bank won't distribute monies without authorizing resolution.

Any suggestions as to how this debacle should be handled? What would termination procedure be? Would going to the Service to try to straighten this out be more trouble than its worth? As always, any thoughts are welcomed and very much appreciated.

[david rigby]

If no written plan document, that sounds like a violation of ERISA to me.

Termination procedures would probably be according to plan provisions.

But, does the plan document say anything about the required qualification of the plan? (Maybe it isn't really a plan.)

[Kirk Maldonado]

You might want to look at: http://www.dol.gov/ebsa/newsroom/fsorphanplans.html.

[mbozek]

Both ERISA and IRC rules require written plan document in order for benefits to be provided. NO plan document, no benefits. If employer went into bankruptcy then assets are property of trustee in bankruptcy. Bank should request trustee to make a decision as to whether participants have a claim to assets and if so then draft a plan document. If the plan is a non qualified trust then under IRC 402(b), all participants will have constructive receipt on plan benfits which are vested under the trust.

[Kirk Maldonado]

That is not completely true that no benefits need be provided if there wasn't a plan document. There are a number of cases on this point. But it definitely makes it a lot harder for the "participant" to prove entitlement to benefits in the absence of any documents.