Plan term'd, paid out, SB needed?

[ombskid]

2 participant plan paid out early in 2016. Valuation is end of year. Is a Sch SB needed for this year?

[My 2 cents]

2 participant plan paid out early in 2016. Valuation is end of year. Is a Sch SB needed for this year?

Based on an assumption that filing requirements for Schedules SB are exactly the same for plans with end of year valuation dates as they are for plans with beginning of year valuation dates (haven't had to deal with a valuation as of a date later than the first day of the plan year in many, many years), the answer is yes if the effective date of the plan termination is in 2016, no if it is in 2015 or earlier. Schedules SB are only not needed for plan years beginning after the effective date of plan termination. This is NOT affected by the timing of the termination distribution.

[Lou S.]

I believe for a terminating plans you get automatic approval to change the valuation date; typically the change is BOY.

[My 2 cents]

I believe for a terminating plans you get automatic approval to change the valuation date; typically the change is BOY.

As noted above, we never work with valuation dates other than the first day of the plan year so I wouldn't know. Is that automatic approval still in effect (for those who do use end of year valuation dates)?

[Lou S.]

I believe for a terminating plans you get automatic approval to change the valuation date; typically the change is BOY.

As noted above, we never work with valuation dates other than the first day of the plan year so I wouldn't know. Is that automatic approval still in effect (for those who do use end of year valuation dates)?

I think the final 430 regulations last year allow for this. Here is a link to the ASPPA summary written by Jim Holland

https://www.asppa.org/News/Article/ArticleID/5583/ct/8c8f44dd3e571b331a51c26307af870c5e94348a5dd0dd1eea31ffff8e9d280fe950dfb5ed42d9c8d543dd8868ade120bd1225a904db7c63c74e8b57102b9288

and in case the link doesn't work here is the excerpt from the link

Short Plan Years and Terminated Plans

For a short plan year (less than 12 months), the final rules confirm that the shortfall amortization installments are prorated to reflect the length of the short plan year.³ The final rules state that if a plan’s termination date is prior to the end of the plan year, then, BF for purposes of §430, BF the plan is treated as having a short plan year that ends on the termination date. Furthermore, the regulations require that if the plan’s termination date is before the usual valuation date, the valuation date must be changed to be within the short year ending on the termination date. In requiring the change, the regulations link to the existing authority to make required changes in the valuation date. The result is that an end-of-year valuation date can be changed to any date in the short plan year (including the first day of the plan year or the plan termination date), and automatic approval is provided for the change.

One consequence of having the year of termination being treated as a short plan year is that the time period for making the final contribution is now 8-1/2 months from the termination date.⁴ This result is unanticipated because pre-PPA guidance (Rev. Rul. 79-237) provided that the time period was measured from the end of the plan year without regard to the termination. Note that the new rule does not appear to affect the filing date of the Form 5500 and Schedule SB, but only the deadline for timely contributing the amount to meet the MRC.

The final regulations added a definition of termination date for purposes of §1.430(a)-1. For plans subject to Title IV of ERISA, the termination date is the date established under §4048(a) of ERISA. For plans that are not subject to Title IV, the termination date is the date established by the plan administrator, provided that the termination date may be no earlier than the date on which all actions necessary to effect the plan termination (other than distribution of assets) are taken. However, additional rules apply for plans that are not subject to title IV as follows:⁵

[ombskid]

Thank you.