Board Res. to Terminate

[Guest penman]

My document provider only provides a Board Resolution to Terminate, there is no place to put a termination date in the VS doc, nor do they provide a plan termination amendment.

I believe they think that the resolution is sufficient. I know that for something like say a benefit freeze, a resolution is not sufficient, the plan document needs to be amended. Although I have seen many plans "frozen" with just a resolution, I believe the IRS made it clear that an amendment is necessary. The idea being that the resolution doesn't change the legal doc, it just says something is going to happen.

Is there any reason that, for plan termination purposes, the logic is different and a board resolution alone would be sufficient?

[Alf]

That is all that is ever done. Of course, the terms of the plan must be considered, but there is no need for an amendment. What would it say anyway? Full vesting? Already in the plan. Distribution event? Already in the plan. . . .

[chris]

May depend on what type of plan it is. For example, if it were a Money Purchase Pension Plan, then the plan doc should be amended to reduce the employer contribution to 0% of compensation. That way if for whatever reason all assets are not distributed as soon as administratively feasible and the IRS says it's still an ongoing plan, then the e/er is not NOW on the hook for a contribution.

[RTK]

If db plan, definitely consider an amendment to freeze plan in the event plan termination does not occur. Also, useful if want to add specific distribution options for the termination. And, may want to address benefit accrual and computation period if terminating in the middle of the period.

[Guest B2Randolph]

You want to amend to be sure that there will be nothing remaining in the plan document - like spousal consent - that would prevent you, Plan Administrator, from forcing distributions out of the plan because of the termination. You still need to notify all participants of the plan termination (which may or may not require a 204(h) notice) so that they are aware if they don't complete the termination distribution forms enclosed that you, as Plan Administrator, will cash out their funds and roll them over to an IRA (because of the new automatic cashout provisions also applying for plan terminations).

I doubt very seriously that any Bd Resolution covered those various points.

[RTK]

As a cautionary note, if a db or mp plan, distributions forced at distribution must be made by the purchase of an annuity unless pv does not exceed $5,000.