owner/ee db plan terminated but never distributed and never amended.

[Guest cac1134]

thinking about a owner plus spouse db plan terminated but never distributed and never amended, etc. how to fix? insignificant operational failure in failing to payout, so self-correction? plan document failure must go vcp ... and what about delinquent 5500s? any help will be appreciated.

[david rigby]

Depends on timing, doesn't it? How long ago was it "terminated"?

[Guest cac1134]

the late 70's, i think.

[mbozek]

Your client needs to hire a retirement plan specialist (Not just an attorney or CPA) to review the forensic evidence to determine the best course of action before going to the IRS. Since the mid 70s there have been several different required amendments including TEFRA/DEFRA/REA, TRA 86, Gust and EGTRRA. Failure to amend for any of those provisions would result in disqualification. In addition only assets which are accrued benefits are treated as employee benefits. Any excess assets are reverted to the employer and taxed as income. Finally the plan would be subject to MRD once the owner attains 70 1/2.

If the plan was disqualified 20 or more years ago the s/l on taxing the benefits to the participants may have expired and the benefits will be treated as after tax income if they are distributed now.

[Guest cac1134]

Since no 5500s, I'd say no statute began running so this is a tough situation. Thanks for your comments.