Guest CoffeePlease24 Posted October 26, 2012 Posted October 26, 2012 Does anyone know of any good checklists or articles that summarize all compliance considerations for terminating plan? I am working on 401K plan terminations (when we acquire a company, we terminate their plan and allow them to rollover to our plan). Thanks for any advice!
rcline46 Posted October 26, 2012 Posted October 26, 2012 Not kowing what kind of plans you are discussing - if they are 401(k), the way your message is worded you are violating 401(k)(6). If you have legal assistance and you question is not worded correctly then that is a different issue. Following the IRS termination work under Form 5310 is a good start, plus likely short plan year issues under the regulations.
BG5150 Posted October 26, 2012 Posted October 26, 2012 The ERISA Outline Book as a checklist section on Plan Terms, I believe. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Guest CoffeePlease24 Posted October 26, 2012 Posted October 26, 2012 Not kowing what kind of plans you are discussing - if they are 401(k), the way your message is worded you are violating 401(k)(6). If you have legal assistance and you question is not worded correctly then that is a different issue.Following the IRS termination work under Form 5310 is a good start, plus likely short plan year issues under the regulations. We do have legal counsel, so I'm sure it's something with my wording ascue, but could you clarify why my wording is a code violation?
ETA Consulting LLC Posted October 26, 2012 Posted October 26, 2012 Not kowing what kind of plans you are discussing - if they are 401(k), the way your message is worded you are violating 401(k)(6). If you have legal assistance and you question is not worded correctly then that is a different issue.Following the IRS termination work under Form 5310 is a good start, plus likely short plan year issues under the regulations. We do have legal counsel, so I'm sure it's something with my wording ascue, but could you clarify why my wording is a code violation? When you purchase a company, (among various alternatives) you may merge "purchased" company's plan into the "buyer's" plan; which is seldom done. The alternative you alluded to was to terminate and distribute the "purchased" company's plan without taking it over. When you do that, each employee in the terminated plan will have an option of rolling the money over to whereever they want. They "may" roll over into the "buyer's" plan, but you may not require them to (unless you are actually merging the two plans). These are just two structural basics, but it tends to get very detailed. Fact patterns are important. Good Luck! CPC, QPA, QKA, TGPC, ERPA
Guest CoffeePlease24 Posted October 27, 2012 Posted October 27, 2012 Not kowing what kind of plans you are discussing - if they are 401(k), the way your message is worded you are violating 401(k)(6). If you have legal assistance and you question is not worded correctly then that is a different issue.Following the IRS termination work under Form 5310 is a good start, plus likely short plan year issues under the regulations. We do have legal counsel, so I'm sure it's something with my wording ascue, but could you clarify why my wording is a code violation? When you purchase a company, (among various alternatives) you may merge "purchased" company's plan into the "buyer's" plan; which is seldom done. The alternative you alluded to was to terminate and distribute the "purchased" company's plan without taking it over. When you do that, each employee in the terminated plan will have an option of rolling the money over to whereever they want. They "may" roll over into the "buyer's" plan, but you may not require them to (unless you are actually merging the two plans). These are just two structural basics, but it tends to get very detailed. Fact patterns are important. Good Luck! Ahhhh I see what you are saying. Definitely bad wording on my part - they can do what they wish with their distribution, but they become eligible under our plan and may choose to rollover to it. Thanks!
rcline46 Posted October 29, 2012 Posted October 29, 2012 The resolution to terminate the 'acquired plan' MUST be executed BEFORE the purchase agreement is signed. If not you are probably violating 401(k)(6). That violation disqualifies BOTH plans. I am writing this stuck at home due to my new love Sandy.
ETA Consulting LLC Posted October 29, 2012 Posted October 29, 2012 If not you are probably violating 401(k)(6). Are you attempting to reference the transition relief under 410(b)(6)? Just asking. CPC, QPA, QKA, TGPC, ERPA
rcline46 Posted October 31, 2012 Posted October 31, 2012 no, transition relief only allows you to operate each plan as if nothing has changed. THere is a strict prohibition on terminating a 401(k) plan and starting a new 401(k) plan for the same people within 12 months of the date of the LAST distribution. The way the OP wrote the question, they are violating that rule, big time. However, if the Resolution to terminate was adopted one minute before the closing of the deal, then you are ok. (I prefer the day before). This should be covered in the sale/purchase agreement. I have no problem with the acquiring company completing the termination. But if the actually acquired the plan, and then terminated it, that is a big problem.
Guest CoffeePlease24 Posted December 17, 2012 Posted December 17, 2012 To clarify for anyone else to sees this post, I don't have the "lingo" right obviously since I'm raising red flags for anyone, but we have ERISA lawyers involved with our deals and I'm confident that we are in compliance. I just wanted a checklist on plan terminations for my own reference. Thanks for all the warnings that we are breaking the law the though
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