PBGC plan termination

[Guest Ron Sevcik]

We have a defined benefit plan with about 50 employees that is terminating. We started the termination process in August 2008. The IRS determination letter was received in November 2009. Normally, the PBGC requires the distributions be completed within 120 days after the IRS determination letter is received. The owner of the company is wondering if there is any way to extend the 120 day period. Like all other plans, there was a substantial decrease in the assets in late 2008 and early 2009. The owner will forego all of his benefits (which the IRS is aware of) but he still only has about 90% of the assets needed to pay benefits. He would like to delay the distribution date a couple of months in the hope that the market recovery will continue and eat up most of the $200,000 funding shortfall he currently has. Has anybody gotten the 120 day period extended? If so, how?

Thanks.

[Dougsbpc]

You might try asking the PBGC for an extension. They may grant an extension for a brief period of time.

We submitted a request for an extension based on the fact that the plan had substantial losses and most of the remaining assets will be difficult to liquidate. They provided an extension of 3 1/2 months.

Check the PBGC web site under the Plan Termination section. They outline the procedure for requesting an extension.