when is last day of plan year in plan termination

[DMcGovern]

For some plan terminations we do, the investment company does not do the distributions directly to participants. Instead, the investment company will process any rollover distributions, but for anyone requesting a lump sum distribution, the investment company closes the accounts and sends all the funds to the Employer. The Employer then has to issue the distribution checks (and take care of the withholding).

If the Employer is just depositing these funds into a company account (not in the name of the plan), and then issuing all the checks from there, would the "clock" for the due date of the 5500 be the date the last of the funds left the investment company, or the date the last check was issued from the Employer?

(We know it would be best for the Employer to deposit the funds into an account in the name of the plan, but the majority of them don't want to hassle with this since it's a one-time deal.)

[gregburst]

For some plan terminations we do, the investment company does not do the distributions directly to participants. Instead, the investment company will process any rollover distributions, but for anyone requesting a lump sum distribution, the investment company closes the accounts and sends all the funds to the Employer. The Employer then has to issue the distribution checks (and take care of the withholding).

If the Employer is just depositing these funds into a company account (not in the name of the plan), and then issuing all the checks from there, would the "clock" for the due date of the 5500 be the date the last of the funds left the investment company, or the date the last check was issued from the Employer?

(We know it would be best for the Employer to deposit the funds into an account in the name of the plan, but the majority of them don't want to hassle with this since it's a one-time deal.)

My understanding is that the due date of the 5500 is the end of the month seven months after the last check was sent; so if the employer sends the checks out in the same month as the investment company, then your question becomes moot.

But if the employer issues their checks in the following month, then I don't know the answer to your question.

[DMcGovern]

Thanks for your response. There are times when the Employer distributes out to the participants in a month or months following when the investment accounts have been zeroed out.

[Bird]

I think they are still plan assets while the employer is holding the money (that's why it is a prohibited transaction, except for tax withholding money).

[Kevin C]

I think they are still plan assets while the employer is holding the money (that's why it is a prohibited transaction, except for tax withholding money).

And, if the employer holds the plan assets for an extended period before paying the distributions or depositing the withholding, I think you have PT issues to deal with. I get nervous if it sits in the employer account for more than a couple of days before the checks are issued. I certainly wouldn't want it to sit in the employer account for months.

[Bill Presson]

I just love investment firms that don't want to get involved in doing the tough part of retirement plans.

Goobers.

Anyway, I would never, ever recommend that plan assets go to an Employer account. One day is a prohibited transaction; forget an extended period of time.

Thus, the perfect solution in Penchecks: use them for all those other distributions.

Full disclosure: I have NO financial interest in Penchecks, but I am a satisfied client.