Determination Letter Request

[ac]

We are filing a determination letter request for a terminating DB Plan. The plan sponsor is an LLC taxed as a partnership. The LLC has two equal partners, which are covered by the DB Plan, and no other employees.

Does the plan sponsor have to provide a Notice to Interested Parties concerning the filing?

[Guest Sieve]

Yes, a Notce to Interested Parties must be provided even if the only individuals ever in the Plan are partners--remember, the Notice requirement is an IRS, not DOL requirement. For purposes of the Notice to Interested Parties rules, a self-employed individual is considered an employee. (Treas. Reg. Section 1.7476-1©(3).) Interested parties for terminating plans are as described in 1.7476-1(b)(5).

[mwyatt]

Actually, there is room for ambiguity here in this situation. If you look at the instructions to the 5310

Line 3a. Section 3001 of ERISA requires the applicant to provide evidence that each employee who qualifies as an interested party has been notified of the filing of this application. If ‘‘Yes’’ is checked, it means that each employee has been notified as required by regulations under Section 7476 or this is a one person plan. A copy of the notice is not required to be attached to this application. If ‘‘No’’ is checked or this line is blank, the application may be returned.

Now assuming that whoever wrote the instructions was trying to be PC and not create a new definition, I'd say your client was able to file a 5500EZ as it only covered partners. Could very well be an argument that the Notice to Interested Parties is inapplicable in your situation.

[Guest Sieve]

The regs under IRC 7476 apply whether or not partners are involved. That there are or are not employees under ERISA is immaterial, especially since ERISA Section 3001 specifically points to the regs under IRC Section 7476 for determining if the advanced Notice was properly given.

But, if this is a future event, what's the big deal? Give each partner a Notice, answer Yes on the Form 5310, wait the appropriate length of time and then file the application.

Are you, by chance, asking not about the Notice to Interested Parties but about the Notice of Intent to Terminate (a completely different animal) which must be given in advance of the termination of a DB plan?