Plan Sponsor closed, Freeze Plan?

[K-t-F]

I have a client who closed his business. Single member business, only plan participant, substantial plan assets. We are trying to roll the assets into an IRA but unfortunately are running into some legal issues with the new IRA custodian accepting the money (a lot of document redlining between the new IRA custodian and the firm investing the IRA funds).

I know a plan needs a sponsor. We have been working on this for a year (no joke). My questions are...

1- Can the plan continue sponsor-less until we iron out the IRA issue? If so how much time do we have?

and what about....

2- Can the plan continue indefinitely frozen or orphaned as long as the document is maintained and the plan operated properly?

Thanks

[My 2 cents]

This may be somewhat naive, but why doesn't your client just go out and find an IRA custodian/investment firm combination (why are they even separate?) who would present no legal problems? Who needs an IRA custodian and investment firm who can't work together smoothly?

[david rigby]

No, the plan cannot continue indefinitely without a sponsor. A "closed business" (assuming no successor company that may become the sponsor) may automatically (under the terms of the plan) create a plan termination. If so, and you should check carefully, that means the plan terms that define/describe plan termination are now in play.

[K-t-F]

"My 2 Cents" - he is well established with this current firm. They have done a wonderful job. He wants to keep the money where it is. Finding a new IRA custodian one stop shop is not an option.

This client is the only participant.. He is 100% vested and we do want to terminate the plan and roll the funds into an IRA. Time is my question. The sponsoring business has closed. Does the question of time come down to the plan document? or is there a blanket answer that is 'ASAP', 'within 90 days'.. is there a rule?

Thanks