New Participants In A Terminated Plan?

[mming]

We have a few calendar-year DC plans that terminated in mid-2009 whose trustees didn't pay out all of the benefits by 12/31/09. Since 1/1/10 is a plan entry date, do employees who meet the eligiblity requirements become participants or can there never be new participants entering a plan after its termination date?

Also, I can envision a couple of the trustees dragging their feet on the payouts to where a full year could elapse from their plan's date of termination. I remember some time ago hearing that a termination goes away after a year if the assets have not been distributed, making the plan an active plan again - is this accurate? BTW, the plan terminations were done via board resolution, so waiting for IRS approval of the terminations is not the reason for the delay.

[david rigby]

BTW, the plan terminations were done via board resolution, so waiting for IRS approval of the terminations is not the reason for the delay.

How about a plan amendment? Assuming there is an amendment, it should state "... no new participants after xx/xx/xx..."

[mming]

Perhaps this language should be included in termination amendments going forward. However, in this case there was no such amendment prior to the 1/1/10 plan entry date - does this mean the plan will have new participants to be included in the participant count on the 5500? How have you handled plan terminations a year after their effective date? All help is greatly appreciated.

[QDROphile]

Please explain how the plans were "terminated"" and yet there is the possibility of new participants. What does "terminated" mean? Unfortunately, there are at least two meanings to "termination" becuse of the IRS position that a plan is not "terminated" until all the assets are disbursed. The colloquial definition implies no new participants and should be effective for cutting off participation unless there is something strange about the resolutions. A termination has to lead a double life becuase it is almost impossible to have both definitions effective at the same time.

[Guest Dressageho]

Do the DC Plans require a contribution, or is it discretionary? What's your real concern? Allocation of forfeitures (assuming they weren't allocated, effective as of the termination date)? Does it matter if people become eligible if no future contributions are made? What's holding up the pay out?

[BG5150]

Doesn't the resolution to terminate the plan say all contributions to the plan will cease as of x/y/zz?