Identify an appropriate date to terminate the plan
Timing considerations should be explored based upon the particular factual situation.
Adopt a Resolution to Terminate the Plan and to Freeze the Plan Accruals as of the Termination Date.
Timely draft the appropriate plan amendment and corporate resolutions.
Provide Notice to the Participants
Notice should be given to participants on a timely basis under IRS and Department of Labor (DOL) rules and regulations.
Amend the Plan to Insure It Reflects All Tax Law Changes to the Date of Termination
Generally the plan must be amended for the various applicable tax acts including but not limited to GUST, EGTRRA, Pension Protection Act of 2006 (PPA), Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act); and the Worker, Retiree, and Employer Recovery Act of 2008 (PPA Technical Corrections Act), etc.
Adopt an Amendment Freezing the Money Purchase Pension Plan Contribution Formula
Draft the proper documentation to effectuate freeze.
Provide an interested party notice, if filing a 5310.
Prepare the required form for this purpose in accordance with IRS and DOL rules.
File a Form 5310 (optional, but highly recommended).
Prudence would dictate filing this Form 5310 in most cases.
Provide participants with necessary distribution forms
Provide participants with items such as the 402(f) notice, joint and survivor annuity explanation/waiver, distribution election form.
Purchase annuities for participants who do not consent to single sum distribution
As required under IRS and DOL rules.
Distribute to plan participants
To avoid complications, such distributions should be done as soon as possible and in a fashion to avoid having to file additional Form 5500s.
File final Form 5500
This Form 5500 needs to be filed so long as a plan has assets, so due care should be taken in the transfer of assets and filing of this Form 5500.
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