Plan termination IRS dl

[Gary]

A one participant plan was underfunded at plan termination.

The plan was not covered by PBGC.

Plan assets were distributed to the extend funded as provided for per 411(d)(3).

IRS sends letter saying that they need a signed "election to forego benefits" statement as per PBGC 4041.21(b)(2).

My understanding is that a non PBGC plan can simply pay benefits out to the extent funded and the statement the IRS requests is not applicable.

Any views? Am I missing something?

Thanks

[mbozek]

A one participant plan was underfunded at plan termination.

The plan was not covered by PBGC.

Plan assets were distributed to the extend funded as provided for per 411(d)(3).

IRS sends letter saying that they need a signed "election to forego benefits" statement as per PBGC 4041.21(b)(2).

My understanding is that a non PBGC plan can simply pay benefits out to the extent funded and the statement the IRS requests is not applicable.

Any views? Am I missing something?

Thanks

Why not give the IRS what they ask for even if it is not required, i.e, is there a downside to giving them the letter?

If you dont provide the letter what will the IRS do?

[Gary]

No down side except it will have to be created now, and IRS might have problem that it wasn't done previously.

[SoCalActuary]

A one participant plan was underfunded at plan termination.

The plan was not covered by PBGC.

Plan assets were distributed to the extend funded as provided for per 411(d)(3).

IRS sends letter saying that they need a signed "election to forego benefits" statement as per PBGC 4041.21(b)(2).

My understanding is that a non PBGC plan can simply pay benefits out to the extent funded and the statement the IRS requests is not applicable.

Any views? Am I missing something?

Thanks

Just write to the IRS that this is a plan that is not subject to Title IV, and the 4041 regulations are not applicable.

[david rigby]

Plan assets were distributed to the extend funded as provided for per 411(d)(3).

IRS sends letter saying that they need a signed "election to forego benefits" statement as per PBGC 4041.21(b)(2).

The participant had to elect the form of distribution. Might the election form already serve this purpose? (OK, it may be wishful thinking, but it's worth a look.)

[Guest Eric A]

Although these waviers happen all the time, they are only permitted per the PBGC reg. you cited. There's nothing in the Code which actually approves of them. In fact, I think there's a PLR out there which concluded that such a wavier was a 411(d)(6) violation. Given that and the fact that that the waiver is a pretty simple form to draft, I would just give the IRS what they want and not press the issue. That's my two cents.