60-Day Notice of Intent to Terminate

[Andy the Actuary]

Back in June the employer who sponsored a collectively bargained single-employer plan sold its assets. All non-owner employees were terminated and distributed lump sums. Remaining are two owner employees (the corporation remains open) who had transferred from the union long ago.

Their total lump sums are small and total under $50,000. The two owners wish to terminate the plan and distribute their benefits immediately to avoid carrying this plan into another plan year. There is absolutely no risk to the PBGC.

This cannot be done and still respect the PBGC 60-day formal notice requirement. Tacitly, they gave themselves the 60-day notice requirement.

Has anyone experience with the PBGC or thoughts in this regard? I.e., would the PBGC revoke the termination? This would be not-good since the owners are under NRA and therefore would have taken an impermissable distribution.

[david rigby]

Forgive the stupid question: is the plan still covered by the PBGC?

[Andy the Actuary]

Forgive the stupid question: is the plan still covered by the PBGC?

Not stupid at all. I had this discussion recently with a person involved with this situation. I know we would still file a 5500 rather than a 5500-EZ for 2008. Nonetheless, it is unclear when the plan ceases to be subject to PBGC juristiction. I'm unsure at this point how to notify the PBGC they're no long involved without filing with the PBGC. These are questions that need to be addressed.

[david rigby]

Have you reviewed the Blue Book(s) for help? For example, see Q&A 00-16 and 07-5.

[Andy the Actuary]

Have you reviewed the Blue Book(s) for help? For example, see Q&A 00-16 and 07-5.

David, thank you. You've given me the key to the Rosetta Stone. Much appreciated.

Best Regards,

andy

[Guest GMP]

The question posed to the PBGC at the 2000 meeting was with regard to "substantial owners". Would the same solution still be applicable if the company were owned equally by 3 non-related people?

[Andy the Actuary]

The question posed to the PBGC at the 2000 meeting was with regard to "substantial owners". Would the same solution still be applicable if the company were owned equally by 3 non-related people?

They would each be a substantial owner so the same conclusion would follow.

[Lou S.]

Forgive the stupid question: is the plan still covered by the PBGC?

Not stupid at all. I had this discussion recently with a person involved with this situation. I know we would still file a 5500 rather than a 5500-EZ for 2008. Nonetheless, it is unclear when the plan ceases to be subject to PBGC juristiction. I'm unsure at this point how to notify the PBGC they're no long involved without filing with the PBGC. These are questions that need to be addressed.

Just write the PBGC for a coverage determination with the facts showing when the plan ceased to cover any non-substantial owners. It's pretty easy and they are pretty quick. Not sure if the PBGC will rule by end of year but we submitted one earlier this year on April 7 and had Ruling form the PBGC on May 2. That inculded an interim corrispondence to clear up a minor question they had.

[Andy the Actuary]

Forgive the stupid question: is the plan still covered by the PBGC?

Not stupid at all. I had this discussion recently with a person involved with this situation. I know we would still file a 5500 rather than a 5500-EZ for 2008. Nonetheless, it is unclear when the plan ceases to be subject to PBGC juristiction. I'm unsure at this point how to notify the PBGC they're no long involved without filing with the PBGC. These are questions that need to be addressed.

Just write the PBGC for a coverage determination with the facts showing when the plan ceased to cover any non-substantial owners. It's pretty easy and they are pretty quick. Not sure if the PBGC will rule by end of year but we submitted one earlier this year on April 7 and had Ruling form the PBGC on May 2. That inculded an interim corrispondence to clear up a minor question they had.

Hey, guess what??? Despite the 2000 Blue Book Q16 (posted on the PBGC website) confirms what you are saying, the PBGC still wants the Plan to file the 500, 501, and actuary's sufficiency statement. The PBGC is saying that since all the non-owners involuntarily terminated on the same day, the standard termination process applies. Of course, this is a process you cannot comply with after the fact because of the deadlines and notifications. Anyone been caught up in this morass before?

[Andy the Actuary]

The PBGC advised now that this will not be a slam dunk and that they will consider this a premature termination and submit this case for audit. So, question is should we forego filing a pro-forma 500 and 501 which essentially accentuates their position and simply stick to our guns that we relied upon information published on the PBGC's website that all we needed to do was notify the PBGC that coverage ended?