Transfer of Pension Surplus to DC Plan

[SadieJane]

Upon termination of a DB pension plan, surplus pension assets may be transferred directly to the employer's DC plan to avoid or reduce the excise tax otherwise applicable under Code Section 4980. Is there any reason that the surplus assets cannot be transferred in-kind to the DC Plan? Thanks.

[CuseFan]

I don't think so, but if the reason for doing so is to keep those assets invested, note that gains and losses in that escrow account will increase/decrease the portion that gets allocated each year - so volatility and lack of liquidity could be issues.

[david rigby]

At the risk of repeating myself, don't forget to re-read IRC 4980 to see the conditions that permit such a transfer.

[Bri]

I just gazed at Code 4980, didn't see anything describing how the transfer "must" occur other than not passing through the employer's hands first.

[Bill Presson]

We see this done, essentially, when the two plans have maintained a combined trust for years. The assets "transfer" to the DC plan in bookkeeping form on an effective date.