Terminating a PBGC-covered 412(i) Plan

[Guest Carol the Writer]

I have one more question about this topic. The Plan, an annuity-only 412(i) plan, had a termination date of July 15, 2006, and the proposed distribution date is September 15, 2006. The insurance company has provided me with the asset values as of July 15, 2006, but there is a 60-day wait for PBGC purposes. This moves the actual date of asset distribution back to Sept 15, 2006.

Question: Must the interest that accrues between 7/15/2006 and 9/15/2005 be distributed to the participants? Or, assuming the plan permits it, can this be an asset reversion to the plan sponsor, a not-for-profit entity? Would the non-profit entity be subject to the 50% excise tax on reversion (25% if there is a successor qualified plan)?

Any thoughts or remarks would be appreciated. Thanks! Carol

[SoCalActuary]

The true 412i plan provides the benefits as the proceeds of the policies.

Can you explain why the policy proceeds could be reverted?

Can you explain why the participants would forfeit interest for the two months (or more) while

they wait for their distribution?

Are the participants at 415 limits and prohibited from taking more funds?

Unless you have a compelling reason, I don't see any possible argument for reversion.

[Guest Carol the Writer]

No, they are not at the 415 limits. It was just a thought. Thanks for your input. Carol