Distributions on terminated plans

[Guest jetfaninmn]

When do distributions begin on terminated 401(k) PS plans? Here what I know:

The company went out of business on 11/3. We are filing the 5310 for the company. There was a layoff 30 days before the actual day the doors closed. We have received completed forms for those participants.

1. Can we begin distributions as soon as all administrative issues have been cleaned up - outstanding payrolls and our fees? Do we have to wait until the "Notice to Interested Parties" is mailed? Can we hold the forms already in hand until we receive our fees?

2. How far back are all participants considered 100% vested if the were already paid out 2, 3 4 months ago?

I have not done a termination in over 5 years and am very very rusty! We have received a call from the DOL and I need to return it.

Thank you all in advance.

[WDIK]

Distributions can only be made as indicated under the terms of the plan document. If participants have reached retirement age, died, become disabled, or terminated employement, they would certainly be entitled to receive distributions under the form and timing provisions for those events.

Filing for a determination letter upon plan termination is not required. However the statement that along with the application the sponsor should "ubmit a statement that all distributions have been or will be made in accordance with plan provisions and proper spousal consents will be secured, when applicable" seems to imply that the timing of distributions is not necessarily tied to the filing of the application. (See Line 19 instructions of Form 5310 [emphasis added].)

If partially vested participants leave employment and their vested account balances are distributed prior to the plan's termination date, they probably would not need to become fully vested. However, especially in the case where the company is going out of business, such participants may be required to become fully vested based upon the partial termination rules.