Plan Termination

[Guest GreenERISA]

I need a quick answer if anyone can help-a terminated 401(k) plan has 12 months to liquidate the assets-what are the repurcussions if they fail to liquidate assets by the last day of the 12 month period?

I should mention that the Plan had been frozen for a period of at least 2 years prior to the vote to terminate.

[Guest GreenERISA]

I need a quick answer if anyone can help-a terminated 401(k) plan has 12 months to liquidate the assets-what are the repurcussions if they fail to liquidate assets by the last day of the 12 month period?

And I see the "administratively feasible requirement on IRS.gov and that it generally means 12 month period...anyone know of any tests on this...for example, if we pushed it 12 months and 3 days?

[jpod]

A plan must reflect, or be amended to reflect, all applicable changes in law and regulations up through the termination date. Assuming the liquidation did not occur "as soon as administratively feasible" after the termination date, you will have to "re-terminate" the plan and make sure that it reflects all changes in law and regulations through the new termination date, and that any necessary amendments were adopted in a timely manner. Another ramification pertinent to 401k plans is that the clock for starting another defined contribution plan woulnd't start to run until the "re-termination" date. (This can have serious consequences if the plan was supposed to be terminated prior to the closing of an acquisition of the employer that maintained the plan.)