Terminating a retirement plan is complicated. The importanceof having a well thought out plan in place before beginning theplan termination process is imperative becausemaking mistakes can be costly.
To better understand why plan sponsors were making mistakes in qualifiedplan terminations, the IRS Employee Plans Compliance Unit conducteda “Termination Project” in 2011. Over 75% of the sampled sponsorsmade errors!
So what kind of errors did plan sponsors make?
Did not file a final Form 5500 series return
Did not actually terminate their plan
Mistakenly indicated the plan was terminated when it wasfrozen
Mistakenly used the same plan number from a previous ordifferent plan
Distributed all plan assets but didn’t mark the final Form 5500series to show it was the final return
Distributed all plan assets but did not indicate zero assets atthe end of the plan year
Did not distribute all plan assets as soon as administratively feasible (*generally within12 months)
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
