DC plan terminated 12/31/99. No distributions. No IRS filing. What

[John A]

A defined contribution plan was terminated 12/31/99. No assets have been distributed. There has been no filing with the IRS. Should or must the plan adopt a new plan termination amendment? If so, what options does the employer have for the effective date of the plan termination (any date in the future, 12/31/00, etc.)?

[smm]

If the amendment terminating the plan 12/31/99 was correctly adopted, that is the date of the termination. All participants are fully vested as of that date. It is not too late to file a 5310 on the termination. The plan must be amended to comply with GUST.

[John A]

smm,

Revenue Ruling 89-87 states that, "A qualified plan under which benefit accruals have ceased is not terminated if assets of the plan remain in the plan's related trust rather than being distributed as soon as administratively feasible" and "generally, a distribution which is not completed within one year following the date of plan termination specified by the employer will be presumed not to have been made as soon as administratively feasible." Other guidance indicates: or within six months of the issuance of the determination letter, if later.

Have you filed the 5310 more than a year after the plan termination date in the past and received a favorable letter on the plan termination?

[RCK]

John A, In June of 1998, one of our acquisitions did an eve of closing termination of their 401(k) plan, but left us with the responsibility of filing for the determination letter. We had all kinds of problems with data, because we in turn sold them within a month, they had changed recordkeepers, and we got minimal cooperation from either the old one or the new one. We did not file for the determination letter until March of 2000. We got approval in early December of 2000.

So, it can be done. The Rev Ruling does say "generally, .. . . ", and we certainly had plenty of extenuating circumstances. But I do not recall getting any questions at all about the elapsed time.

I would file Immediately.

RCK

[Alf]

I have had the same experience as RCK. We were warned by our lawyers that the IRS might give us problems about our filing that was made beyond the one year period, but we received a favorable letter no questions asked.