determination letter process

[Guest justbe]

What distributions are required to be made under a tax-qualified plan (DC) during the determination letter process for a terminated plan. How long can an employer wait to receive a letter from the Service before being required to distribute all of the terminated plan assets?

[chris]

Don't know that any distributions are "required to be made" during the process. Depends on how comfortable the employer is that there will be no problems with receiving the favorable determination letter upon termintaion. I generally have employers designate in the resolution terminating the plan that it will be submitted to the IRS and that no distributions will be made until a letter is received. That way you don't have the issue of the IRS finding a problem and the employer having to get $$$$ back from a participant (often hard to do) that the employer already distributed.....

[Alf]

Distributions being made for reasons other than the plan termination should continue, just as other administrative functions of the plan continue. So, death, employee quits, hardship, etc. should continue. Most companies don't make the distirubutions that are solely due to termination of the plan until the IRS rules on the determination letter application.