Plan Never Terminated!

[Miner88]

I really need help with this one!

Company A bought the stock of Company B 4 years ago and merged that company into itself (so no more Company B). Prior to the closing of the deal, Company B was to terminate their 401(k) plan. Just last month, Company A discovered that the former plan administrator for Company B was still trying to distribute the assets of its 401(k) plan and that there was a balance in the forfeiture account. Apparently, all 5500's have continued to be filed for the plan and the former plan administrator has even adopted a restatement of its prototype plan as of August of this year! (Not sure where he gets the authority to sign for a company that no longer exists!)

Here's my issue - since the assets were not distributed within one year, I assume Company A now "owns" the plan. Company A can continue to pay out the remaining balances of the participants. However, what can be done with the forfeiture account? The plan document says that forfeitures may be used to satisfy employer contributions or to pay plan expenses. At this point, no employer contributions have been made for 4 years and there are no plan expenses (the recordkeeper apparently is getting paid from the participant account balances).

Any help would be appreciated!

[Guest Kabert]

Escheat? Merge with an ongoing plan? If not terminated due to lost participants, hire a lost participant-search company or use SSA letter fowarding service.

[david rigby]

http://benefitslink.com/boards/index.php?showtopic=42789

[mbozek]

I really need help with this one!

Company A bought the stock of Company B 4 years ago and merged that company into itself (so no more Company B). Prior to the closing of the deal, Company B was to terminate their 401(k) plan. Just last month, Company A discovered that the former plan administrator for Company B was still trying to distribute the assets of its 401(k) plan and that there was a balance in the forfeiture account. Apparently, all 5500's have continued to be filed for the plan and the former plan administrator has even adopted a restatement of its prototype plan as of August of this year! (Not sure where he gets the authority to sign for a company that no longer exists!)

Here's my issue - since the assets were not distributed within one year, I assume Company A now "owns" the plan. Company A can continue to pay out the remaining balances of the participants. However, what can be done with the forfeiture account? The plan document says that forfeitures may be used to satisfy employer contributions or to pay plan expenses. At this point, no employer contributions have been made for 4 years and there are no plan expenses (the recordkeeper apparently is getting paid from the participant account balances).

Any help would be appreciated!

Since Company A purchased the stock of B it is legally the sucessor in interest to B with all of the legal rights to ownership of B's assets. Have you asked A's counsel what are A's legal rights to the forfeiture funds such as contributing them to a plan sponsored by A or using it to pay expenses of A's plan? Since the plan has not been terminated under the IRC maybe it can be merged with a plan sponsored by A and the forfeitures used in accordance with the provisions of A's plan.

[Miner88]

Thanks for all of your input. There are no missing participants at this point, we're just trying to deal with the forfeitures. Company A did not want to merge this plan into any of its existing plans - although I think that is the only way to deal with the forfeiture, based on the comments I'm getting.