Excise Tax on Plan Termination

[Dougsbpc]

A few weeks ago we had a woman in her mid 80's call us to take over the administration of her defined benefit plan. Upon reviewing the plan, we found it to have assets that far exceeded the value of benefits (benefits at 100% of FAC). She has been the only participant, retired 15 years ago and has not worked since. It appears all filings, RMD's etc have been done.

It looks like the administrator just kept the plan going without suggesting terminating the plan back 15 years ago when it was slightly over-funded. Of course you never know the real story as the prior administrator does not want to talk about this. At a minimum, they should have considered an in-service distribution.

It looks like she could not have a qualified replacement plan as she has not worked and has had no earned income for 15 years.

Has anyone run into anything like this? Are there any potential solutions to avoid 50% excise tax and income tax on the reversion?

Thanks