Plan Termination

[Jilliandiz]

Client wants to terminate their 401k plan, do I need to file for a determination letter? What procedures do I need to take in order to terminate a 401k plan? They would like to terminate it this year.

[wmyer]

Determination letter is not a requirement, but may be advisable. Some of the things you would need to do are: execute a board resolution to terminate the plan, notify participants (not a requirement); notify payroll to stop taking deductions; update plan for all law changes to-date; notify plan vendor of termination; do final 401(k) and other compliance testing; send distribution forms to participants; locate lost participants; etc.