Annual Funding Notice for terminated Plan

[AndyH]

Does an AFN still need to be issued for a terminated plan.?

Plan terminates 12/31/2008 and IRS takes forever to approve termination, resulting in a mid 2010 payout. Must a 2009 AFN be issued (by 5500 filing date of 10/15/10)? What about next year, is a 2010 AFN needed for the final short year?

I've heard nothing but quiet Yesses on these questions. Is there any new information?

[Andy the Actuary]

Does an AFN still need to be issued for a terminated plan.?

Plan terminates 12/31/2008 and IRS takes forever to approve termination, resulting in a mid 2010 payout. Must a 2009 AFN be issued (by 5500 filing date of 10/15/10)? What about next year, is a 2010 AFN needed for the final short year?

I've heard nothing but quiet Yesses on these questions. Is there any new information?

Let's see: Except for the small plan exception, wouldn't the AFN (for a calendar year plan) be due 4/30? So, presumably, small plan exception applies. In such case, by the time the AFN would be due, the plan no longer has any participants or undistributed benefits. In short, to whom would you distribute the notice?

I offer a very loud "no." This is based on no "new information" but on common sense as the information contained in the notice is of absolutely no value to the former participants -- they're already received their benefits. For this reason, the SAR was not distributed in similar situations.

[AndyH]

Thanks for your comments. I'd love to see something in writing about the SAR issue also - I thought that must be distributed to participants who were such as of the last day of the plan year, although I have heard "rumors" that you could handle it as you describe, to participants as of the distribution day.

I'm nominating you as the Director of such issuances because I do like your answers.

[Effen]

To me that is still one of the open questions. The notice says "all participants" must receive the AFN, but it never defines as of what date. Forgetting about a plan termination for a second, what about an ongoing plan? All participants at the BOY or EOY? What about participants who terminated non-vested during the year, or even in the subsequent year, but before the notice is distributed? What about participants who die without a beneficiary?

I think the safe answer is to give it to all participants as of the first day of the plan year, but I'm not going to argue with a client who wants to have a different interpretation.

[AndyH]

What about participants who die without a beneficiary?

Clearly they must be notified ASAP !

Thanks for the comments.

[Andy the Actuary]

To me that is still one of the open questions.

At least in the editions I have, neither the ERISA Outline Book nor Pension Answer Book address this issue relative to the SAR, which should be the same issue.