Waiver by Owner

[MGB]

I realize this has been discussed many times, but I couldn't (easily) find a full, definitive answer to how this works. (I have not worked with small plans before.)

A PBGC-covered plan only has the owner left (closing down business at retirement, everyone else has been paid out at termination of employment). It is underfunded and doesn't want to contribute anything.

I understand they can sign some type of waiver. Who is this going to? Isn't this just to let the PBGC know that all benefit liabilities have been satisfied? What happens when the IRS finds out the plan was terminated and not all accrued benefits were paid?

I am confused as to what i has been dotted and t has been crossed (or not dotted and not crossed), with open liability (to the actuary or TPA) still hanging out there.

[david rigby]

You’ve probably already seen these, but just in case:

http://benefitslink.com/boards/index.php?showtopic=17215

http://benefitslink.com/boards/index.php?showtopic=5466

http://benefitslink.com/boards/index.php?showtopic=16104

http://benefitslink.com/boards/index.php?showtopic=19804

http://benefitslink.com/boards/index.php?showtopic=14313

http://benefitslink.com/boards/index.php?showtopic=5373

Perhaps, the simplest approach would be to make a distribution “to the extent funded”. I think it is common that plan provisions would support that.

[Blinky the 3-eyed Fish]

Without looking at all the links pax has there is more information on majority owner waivers on page 21 of the Form 500 instructions here: http://www.pbgc.gov/forms/500_instructions...c9000c5&cmd=xml

The waiver, like election forms, do not get mailed to anyone, but the PBGC will ask for it upon audit. The IRS does not explicitly approve of the waivers, but accedes nonetheless. If you are worried the actuary has any liability by having the client sign a waiver, don't be.