PBGC plan termination

[Gary]

A plan with two employees terminated in March 2006 and distributed benefits in July 2006. That is, a standard termination.

The plan is covered by PBGC and did not terminate with PBGC process.

What are consequences of not filing with PBGC FOrm 500, notices, etc.?

And if they were to do so now, what would happen? That is, would PBGC disqualify plan, change termination date, some other approach?

[Mike Preston]

The plan did not terminate. It must be re-terminated.

[Blinky the 3-eyed Fish]

And now you have probable problems with the in-service distributions that were made. Oops.

[Gary]

Fortunately, the employees terminated before the distributions.

[Blinky the 3-eyed Fish]

An interesting question then in my mind is whether or not the plan is covered by the PBGC upon the payout of the two terminees, leaving the plan with no participants. One of the exceptions to PBGC coverage is a plan that covers only substantial owners. One could infer that a plan that doesn't have any non-substantial owners in the plan meets that exception. Of course I would request a coverage determination.

Your original PT date is still void though because the people weren't paid out prior, but maybe you don't have to run through the PBGC PT hoops.

[AndyH]

The plan definitely becomes non-covered by PBGC at some point after the payments have been made. But I think the payments would need to precede the DOT by some period of time. I think there is some necessary time frame but I don't remember what it is.

Gary, you need to write a book about some of these client adventures.

[david rigby]

Fortunately, the employees terminated before the distributions.

Be careful here. Were the distributions made to these partcipants because the plan was (thought to be) terminated? That is, the timing of distribution to a VT may differ from the timing under a supposed plan termination. I'm not saying this is necessarily a problem, but it may be prudent to know all the details.