Benefit Restrictions for Terminating Plans

[ishi]

I have a plan where benefit accruals were frozen and the plan started termination proceedings (form 5310 filed) in 2006. The termination is still ongoing and I was wondering if the new restrictions on accelerated benefit distributions would apply. I did not see a specific exclusion for terminating plans. The sponsor intends to fully fund the plan, but only after IRS approval (but before final benefit distributions - i.e. lump sums). If I certify now that restrictions apply, could I then recertify later that the restrictions were lifted? I am trying to avoid this by some overarching exclusion for terminating plan. Thoughts?

Thanks much!

[Blinky the 3-eyed Fish]

Assuming your termination proceedings actually included a resolution to terminate the plan, well the plan isn't subject to any of the AFTAP crap.

[Andy the Actuary]

Mr/Ms 3-i-d fish, would you please cite a reference that excludes from the 436(d) restrictions plans that have been terminated? Thank you. Andy T.A.

[Blinky the 3-eyed Fish]

The plan terminated pre-PPA and thus PPA changes don't apply to it.

On a side note, I have heard some argue that for all plans the restrictions do not apply once the plan has been terminated. There's nothing definite on this though and can't remember if this is a technical corrections inclusion. Of course it makes sense.

[Andy the Actuary]

The plan terminated pre-PPA and thus PPA changes don't apply to it.

This makes much sense. On the other hand, the plan is still alive because it has not yet distributed assets. 5500s are required as are PBGC premiums if so subject. I see no exception in IRC 436 exempting it. Have you seen this opinion offered formally or informally by the IRS?

[Blinky the 3-eyed Fish]

It's a general rule that if a plan terminates prior to the enactment of a law change, that plan is not subject to that law change. There has to be many threads here that bring up that if you want to search. Me no time to.