RCP

RCP Solutions recently created a partnership with rollover provider, Centier Bank.  With this partnership, RCP Solutions has expanded the options available to their clients for distributing final assets in a plan termination.

In terminating a defined contribution plan, like a 401(k) plan, RCP Solutions provides all required communication steps with plan participants as stated in the Department of Labor’s FAB 2004-02 guidelines.  At the end of the process, the plan sponsor or recordkeeper has the choice of where any final assets which weren’t resolved in the FAB process will reside.  Providing flexibility and options for the client if they don’t have a preferred provider allows them to choose the rollover provider that works best for them.

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Because of the layoffs sparked by the current recession, many managers have been compelled to look into what their companies should know about 401k partial termination.

By law, if there is a partial termination of a qualified plan, the plan sponsor must give ALL effected participants the benefits that they have accrued under the plan.

Failure to do so could disqualify the plan and result in significant costs to the employer –

Not to mention possible lawsuits by plan participants who are forced to prematurely recognize income due to the plan’s disqualification. (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…)

Do you need to learn how to terminate a defined contribution plan?

If so, read on to learn the basics of defined contribution plans and the steps involved in terminating one.

If you still have questions at the end of this article, feel free to contact RCP Retirement Plan Management Services by clicking here to fill out the online contact form.

OR –

If you would like to speak to an expert over the phone, call us at 267-607-4120.

What Exactly Is A Defined Contribution Plan?

Here’s a brief definition — if you already know this, feel free to skip to the next section on how to close a defined contribution plan.

A defined contribution plan is one in which the benefits of an employee during retirement ultimately depend on the amount of contributions to and asset appreciation within an individually-owned account. This is in contrast to defined benefit plans in which employees have no individual accounts, but rather are promised a benefit from the company during their retirement. The value of the benefit is typically based on the employee’s length of service and earnings history. (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…)