Residual Assets - Zero Participants Term DB Plan

[Rob P]

A large calendar year DB plan (150 participants) terminated and the sponsor purchased annuities covering 100% of the plan’s benefits in December 2012. After the purchase of annuities the plan’s trust balance was $0.00.

Of course, a week later a $200 dividend posted to the trust and was not dealt with until June 2013 when it was used to pay plan fees (balance in trust as of 12/31/2012 was $200).

We have no problem with preparing a 2013 5500, but I am not sure how we should be reporting the participant counts. I would think that technically the plan had no participants or benefit liabilities since the annuities were purchased.

Question – is it reasonable or even allowable to file a Form 5500 with a 0 participant count as of 12/31/2012 and still have assets in the plan? Going with the same thought, could we than file a final 5500-SF for 2013 showing zero participant counts as of 01/01/2013?

Any thoughts or suggestions are appreciated.

[Calavera]

I guess you can show $200 as payable on the 2012 Form 5500 with final assets of $0 and mark it as final filing.

[chc93]

I guess you can show $200 as payable on the 2012 Form 5500 with final assets of $0 and mark it as final filing.

I agree. We've done exactly this in the past.

[Rob P]

Thanks. I have used that approach for a few small plans in the past, but technically you cannot file a final 5500 showing a liability (or payable). Plus, in this case the auditor will not signoff, which means we need to prepare a 2013 5500.

At this point I am inclined to file a 2013 marked off as final and show zero participants at both the beginning and end of years.

[chc93]

So... I guess the audit report will show $200 at 12/31/12. With 0 participants at 01/01/13, no audit report is required for 2013. Would the auditor agree to including a "reconciliation to Form 5500" section (which we've seen in various audit reports) in the 2012 report, disclosing $200 as of 12/31/12, with explanation that $200 was paid as administrative fees prior to filing the final 2012 5500? Otherwise, seems like your option of a 2013 5500 with 0 participants at beginning and end is the only way to go...