Excess assets in DB Plan Termination with no Plan Sponsor

[ConnieStorer]

Here is a strange problem that an associate of mine is dealing with...

A defined benefit plan is being terminated.  The only participant, I will call Mr. Bill, received the maximum payout allowable and there are excess assets.  There is no possibility of a qualified replacement plan so our only option is to revert the excess back to the Corporation.  Now we find out that the Corporation no longer exists.  My understanding is that there was a divorce and the ex was awarded ownership of the Corporation.  The only employee of the corporation and the sole Participant in the Plan was Mr. Bill.  He terminated employment with the corporation that the ex took over and started a new company.  Now we found out that the ex closed out the corporation.

Any suggestions on what to do with the excess assets.

[Bill Presson]

FWIW, this isn't me. 😁

[david rigby]

Roughly, how much?

 

[Peter Gulia]

If the common shares of the plan-sponsor corporation were transferred to the participant’s former spouse, consider that some right or interest in the reversion might belong, legally or equitably, to the former spouse.

The State law that governs the corporation might include law for reviving even a dissolved corporation to take title to its property not collected and disposed of before the dissolution. Also, the State law that governs the divorce or a settlement agreement might include rights and responsibilities.

The plan’s trustee should not dispose of or use the plan’s assets until the trustee gets the trustee’s lawyer’s advice.

This is not advice to anyone.

[ConnieStorer]

The reversion will be roughly $60,000.

Peter, thank you for the advise.  We will throw this back to the attorneys.