Plan Termination with Assets, problems and wants to start new plan

[pixmax]

CPA came to me with a client that terminated his plan 3 years ago, all participants have taken distribution except the owner. The owner was told that he could not take distribution until the Safe Harbor was made from 3 years ago. The Plan is a Safe Harbor maybe and sent paperwork to TPA and never provided notices to participants.

Should and can this go through VCP? We can roll the money out and finalize the termination but the client will need to wait 1 year before opening another plan. Does he have the option to keep the plan open if he filed under VCP and not terminate?

[My 2 cents]

If the plan terminated 3 years ago but the assets have not all been distributed, is the plan still considered terminated?

[pixmax]

That was my thought, however if everyone took their money except for the owner, and if the plan would not be considered terminated, don't we have a prohibited transaction since their is no distributable event? The client would like to keep the plan going but all employees took their money and some are still working for the company.

[John Feldt ERPA CPC QPA]

Not a prohibited transaction, but the distributions now lacked a distributable event, except for terminees and those eligible for in-service distributions. Look at Rev. Proc 2013-12 to see how a distribution gets corrected when paid out before it was eligible. Also, has the plan kept up with all its required amendments? Since assets are not paid out, the plan is ongoing, and thus has to keep its document language up-to-date for compliance purposes.