RCP

One of the most important functions for a plan sponsor during a defined contribution plan (401k, profit sharing, etc.) termination is the distribution of assets to the participants. For many, contacting plan participants through normal means—certified mail or phone calls—will result in contact with the participant and ultimately resolves the situation. However, there are many circumstances, such as a participant name change or address change, that prevent communication and cause a “lost participant” status on the account. Finding missing participants is the duty of the plan fiduciary. (more…)

This article comprehensively addresses the pension plan termination process in an effort to inform you about the procedure.  It will specifically detail the definition of a pension plan, the types of pension plans, the types of plan terminations, and how to facilitate the closing of a pension plan upon termination. (more…)

IMPORTANT CHANGES HAVE BEEN MADE TO THE EMPLOYEE PLANS DETERMINATION LETTER IN 2012 BY THE IRS. CLICK ON THE FOLLOWING LINK TO SEE IF IT APPLIES TO YOUR SCENARIO.

www.irs.gov/pub/irs-drop/a-11-82.pdf

Actually, there is no such thing as a “401k termination letter”, though it is a commonly [mis]used phrase.

What people really mean when they say it is a 401k plan “determination” letter. You can see how one may confuse the two.

But, it just so happens that this IRS letter IS an important necessity when terminating 401k plans.

What You Need To Know About “401k Termination Letters”

A 401k determination letter is Form 5310 that is filed with the IRS.

An affirmative response from the IRS indicates that it has reviewed the plan document and found that all of its provisions comply with the requirements for a qualified 401k plan.

An employer who sponsors a 401k plan is strongly advised to get an IRS determination letter when the plan is first established, whenever it is amended and before the plan is terminated.

However it is not a requirement. In fact, we see many plans that terminate without first filing this form.

A favorable IRS 401k determination letter is important to the employer sponsoring the 401k plan when they want the peace of mind that they have followed all the rules.

Why Determination Letters Are Important

Qualified 401k plans give substantial tax benefits to both parties. (more…)