Is the IRS accepting Form 5310's prior to restatement of plan document

[Guest PGross]

Is the IRS accepting Form 5310's during the restatement process? We have a company with 2 plans they want to terminate and file 5310's...a 401(k) and a MPP plan. Do we need to wait until we get the approval from the IRS on the 5310's to pay everyone out? They are anxious to terminate these plans.

[John A]

Yes, the IRS is accepting 5310s during the restatement process - the plan will have to be amended for GUST.

If you are talking about defined contribution plans, then the question of whether or not you can pay everyone out prior to getting IRS approval has been discussed before and I'm still not entirely clear on the answer, but it is generally recommended not to make payments until approval is obtained. However, some would say that terminated participants should continue to be paid, even before approval is obtained, unless its a case where every participant terminated employment (business was shut down). I'm still interested in other's opinions on who, if anyone, should be paid out while waiting for an approval letter on the termination, and if everyone is made to wait, when does the wait start (as of the proposed date of plan termination but pay if application for distribution received before that date?).

[david rigby]

I thought that the (over-simplified) rule was that the plan should continue its normal operation while a termination was in process. For example, if an EE terminates employment, dies, becomes disabled, etc. the regular operation of the plan should remain in place. Observe break-in-service rules in the plan, etc. Just don't do anything not in the plan, such as give a lump sum where such lump sum is authorized only by the plan termination.

[Guest FredReilly]

I would think that the purpose of waiting for approval is to verify that you have the corect account balance or benefit to distribute. That is that any issues concerning 415, GCM 39310, etc. are ruled upon and that you don't have to correct any amounts due (a difficult thing once distributions are complete). If you are confident no such issues exist, then there would be no reason to postpone distributions.

It seems that most 5310 submissions I have made in the past couple of years are solely document compliance issues, almost exclusively ones that would not affect the amount of distribution a participant would receive, maybe with the exception of post GATT 415 issues.

The date of termination is that adopted in the resolution, so distributions after that date would be after termination assuming no defect in the resolution.