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Plan Termination

The process of terminating a tax-qualified plan is sometimes more complicated than the year-to-year operation of the plan itself. The IRS regularly audits terminated plans. Failure to correctly terminate a plan can result in the assessment of taxes and penalties. The steps to terminate a plan will vary depending on plan type and individual circumstances. We have summarized (in general) the many steps involved with terminating a defined benefit plan here.

We assist with the entire process of winding-up the operation of a plan to submitting required IRS and PBGC paperwork and finally distributing the plan’s assets. Government filings are required each plan year until all plan assets have been distributed. If you are audited, we can represent you before the IRS.

Our plan termination services include:

  • Preparation of amendments and resolutions (for review by legal counsel) to freeze or terminate the plan
  • Preparation of plan amendments (for review by legal counsel) necessary to bring plan into compliance prior to termination
  • Drafting §204(h) notices that inform participants of the intent to freeze or terminate a plan (for review by legal counsel)
  • Drafting employee benefit calculation and information notices
  • Completion of IRS Form 5310 and the final Form 5500
  • Calculation of final benefit amounts and preparation of distribution paperwork
  • Completion of Forms 1099-R and 945, if requested
  • Representation before IRS auditors, if necessary

Our plan termination services include the additional steps required for a defined benefit plan covered by the PBGC:

  • Drafting Notice of Intent to Terminate (for review by legal counsel) in compliance with PBGC requirements
  • Completion of PBGC Form 500, Schedules EA-S and REP-S and required attachments
  • Completion of PBGC Form 501, post-distribution certification
  • Representation before PBGC auditors, if necessary

Contact us today if you would like Independent Actuaries, Inc. to handle your plan termination.

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