Money Purchase Plan Termination and Distribution

[Guest benefitstudent]

The plan sponsor is liquidating and may be administratively insolvent.

The plan is to be amended and submitted for a final determination letter. Is it possible for the plan to be amended to provide for partial distributions pending the receipt of the determination letter? Would this be a significant risk to the issuance of the determinaton letter? May those eligible for retirement under the terms of the plan be processed as usual (assuming there is anyone at the company to process the request) and paid their account balances?

Assuming there is no money in the estate and no one left at the company, how should this be handled? An independent fiduciary paid from plan assets?

This is a difficult situation imposing great hardship on participants. Any suggestions would be greatly appreciated.

[JanetM]

If the plan has been operated proberly and you don't have any goofy provisions that may not qualify you can distribute the assets before you get the letter.

You mention estate, to whom did the owner give the business to or who is named as administrator of the estate? That person, I think, would become the new sponsor and it would be their job to terminate the plan.

[Guest benefitstudent]

If the plan has been operated proberly and you don't have any goofy provisions that may not qualify you can distribute the assets before you get the letter.

You mention estate, to whom did the owner give the business to or who is named as administrator of the estate? That person, I think, would become the new sponsor and it would be their job to terminate the plan.

The plan sponsor is in Ch 7, liquidating in bankruptcy. I was referring to the bankruptcy estate. Thank you very much for your response.

[Bird]

Yes, you can pay after terminating the plan but before getting a DL. The risk is that some kind of reallocation might be requested and if the money is already paid out that makes it "difficult."