VCP as part of plan termination?

[Dougsbpc]

A small non-pbgc cash balance plan will terminate as of December 31, 2016. Can voluntary correction be part of the determination letter request?

Thanks!

[My 2 cents]

Out of curiosity, what needs to be corrected? Is it bigger than a breadbox?

[Dougsbpc]

It may or may not be bigger than a breadbox.

Actually, we took over this plan along with their 401(k) plan.

When we set up the CB plan on our system, we matched the prior valuation numbers, although when running 401(a)26 several participants were under 1/2% of pay and therefore less than 40% receiving meaningful benefits.

We would like to propose increasing those benefits to just more than 1/2% of pay.

[John Feldt ERPA CPC QPA]

How close were they to 0.50%? I've seen a couple of cases where the IRS did not pursue benefits at 0.45% or so.

[Dougsbpc]

A few of them are .32 and one is .35.

I went to a seminar about 8 years ago where one of the big time ERISA attorneys was speaking. I thought one of the things he mentioned was that a voluntary correction could be done along with a determination letter request upon plan termination. Has anyone done this? Maybe this has changed or maybe I just heard wrong?

[John Feldt ERPA CPC QPA]

Yes, it has been done. They used to be submitted together, but that was a mess for the IRS to handle. I think they are submitted separately now. Section 10.05 of EPCRS: The IRS may process a determination letter application, including 5310, while separately processing a VCP submission. The D letter will essentially be held until the VCP submission is closed. You have to make sure you communicate clearly to the IRS in D letter application that the plan is also submitted under VCP, and also mention in the VCP application that the plan submitted a Form 5310 application.

[EBECatty]

I've done this before (for different errors) and it wasn't a problem. Make sure the DL application clearly says you've submitted through VCP as well.