Frozen Pension Plan

[Jim Nichols]

The plan fiscal year end is 3/31.  Since the plan was frozen on 4/1/08 the 2008 Form 5500 would have been the filing for the year it was frozen. 

[BG5150]

Still gotta file 5500's if plan is Frozen.

 

From the IRS: (emphasis mine)

Quote

Sponsor didn’t file Form 5500 series return. A few sponsors missed filing their annual return for one or more years while their plan was frozen. Being frozen doesn’t eliminate the Form 5500 series filing requirement.

https://www.irs.gov/retirement-plans/employee-plans-compliance-unit-epcu-completed-projects-project-with-summary-reports-frozen-plan-amendments

[ESOP Guy]

To be clear even a terminated plan would have to keep filing Form 5500s until all the assets are paid from the plan.  The last Form 5500 has to show there are no benefits due and no assets in the trust. 

[Jim Nichols]

I just spoke to the DOL and they confirmed that the plan has not filed a 5500 since 2008.  The woman I spoke to at the DOL was very shocked by what she was hearing.  Unfortunately she said they only have 10 investigators for my 5 state area so it might take some time for them to get to my case.

[Jim Nichols]

Update:  The DOL has requested copies of the notices that would have been provided to the participants to inform them of the Plan freeze and also a copy of the most recent 5500 that was filed.  They originally had until today to respond but they have requested a two week extension.

[My 2 cents]

25 minutes ago, Jim Nichols said:

Update:  The DOL has requested copies of the notices that would have been provided to the participants to inform them of the Plan freeze and also a copy of the most recent 5500 that was filed.  They originally had until today to respond but they have requested a two week extension.

Consarn it, they'll be over the border by then!

[Jim Nichols]

The lady I'm dealing with at the DOL told me that it appears that they are looking to blame the actuary and play the ignorance card.

[My 2 cents]

16 hours ago, Jim Nichols said:

The lady I'm dealing with at the DOL told me that it appears that they are looking to blame the actuary and play the ignorance card.

However culpable the enrolled actuary may have been (an argument more to be made to the jury in a malpractice suit than to the DOL), the enrolled actuary is not a plan fiduciary and the actions that were required but not taken are the responsibility of the plan administrator.  Don't expect much sympathy from the DOL if the appropriate actions were not taken as required because the plan administrator was negligent and ignorant.  The DOL is not going to treat ignorance as an acceptable excuse for egregious failures.  And the failures here sound egregious.

[jpod]

It doesn't matter what the DOL thinks or doesn't think.  Absent compliance with 204(h) the plan was never frozen.  Jim Nichols, what does your ERISA lawyer think about next steps for you to take?   

[Effen]

 "Absent compliance with 204(h) the plan was never frozen."  

I am not so sure about this statement.  I already posted my reasoning, but I think it is a facts / circumstances situation.

[jpod]

I thought the 436 possibility was refuted somewhere in this lengthy chain, but perhaps I am misremembering in which case you're right.

[Jim Nichols]

The DOL informed me that enforcement is not going to proceed.  Apparently the IRS froze the pension due to it being underfunded.  The DOL told me that if that happens then the Plan sponsor has not obligation to inform the participants that the Plan has been frozen.  Does anyone have any IRS code section that I can provide to the DOL in response to this?  I would think that a 101(j) notice would still be required.

[Lou S.]

The 101(j) notice is required.

Try IRS Notice 2012-46 which is the IRS official guidance on the 101(j) notice if I recall correctly.