Is this 403b plan really terminated?

A 403(b) plan for a non-profit has only a single participant with an account balance.  The participant terminated long time ago.  No one else currently uses the plan and the organization wants to terminate it.  The terminated participant does not reply to any contact requests.

The account is held on a platform at a large national insurance company.  Their instructions were for the non-profit to send a letter of instruction saying the plan is being terminated.  The account would stay at the insurance company as a 403b account but would no longer require an employer signature.  

But if it is still considered a 403b account....can we really say that the plan is terminated?  Could we file a final 5500 with $0 assets at EOY if the account is still a 403b account?

Thanks for any thoughts on this.

You will find this article helpful for finding a path forward for terminating the plan. 

https://www.groom.com/wp-content/uploads/2022/11/IRS-Guidance-Provides-More-Detail-on-Terminating-403b-Plans.pdf

It addresses what to do if the plan holds annuity contracts or custodial accounts, and also comments on using the PBGC missing participants program for terminating defined contribution plans.

It seems the insurance company is being somewhat casual about the documentation needed to clarify that the account no longer is a plan asset, or they are just being condescending.  You may ask for clarity on the titling of the account and on reporting the distribution of the account to the participant.

If the plan is ERISA-governed, consider that even if one otherwise could end a plan by delivering an individual annuity contract or certificate (or delivering a similar contract right regarding a custodial account) doing so might not end the plan for one or more purposes of ERISA’s title I.

That’s especially so if the individual contract lacks adequate provisions to preserve the participant’s spouse’s (possibly including a future spouse’s) ERISA § 205 survivor-annuity or death-benefit rights.

Consider also that there are many ERISA title I provisions for which the Labor department, not the Treasury department, has interpretation powers.

If discerning whether the plan is fully ended turns on questions beyond those the IRS guidance answers, the plan’s administrator should lawyer-up.

This is not advice to anyone.