Can directed Trustee be removed during Plan Termination?

[Bruddah Kimo]

I have an Employer that sponsors a small 401k Plan (23 accounts, $2.9M in assets). The Employer was recently purchased by another company and the decision was made to terminate the plan and distribute the assets. The Employer currently pays to have a Directed Trustee (who is also the recordkeeper). When informed of the impending plan termination the Trustee said they must have either 1) an FDL via 5310 filing; or 2) an indemnification letter from the sponsor before they will distribute assets to the employees. The sponsor refuses to do either. He doesn't want the employees to wait for the FDL and he refuses to sign the indemnifciation letter. He floated the idea of amending the Plan to remove the directed Trustee and name himself Trustee of the Plan. Seems too simple a solution so I thought I would see if anyone else had run into this situation before and what their experience was. Anyone have any comments regarding this situation? Any advice would be appreciated!!!

[Bird]

Works for me.

[Peter Gulia]

Does the person who proposes that he serve as trustee understand that accepting this responsibility means bearing personal liability?

By contrast, the directed trustee's indemnity letter might have limited its obligation to the directing plan administrator, which might be a business organization rather than a natural person.

[Bruddah Kimo]

Works for me.

A very good point I will try to impress upon him when I explain his options and the ramifications. Thank you!