Action Step Checklist: Terminating a Defined Benefit Retirement Plan By: Lawrence PetersCPA, EA, AIF®

“ Terminating your defined benefit plan is not always the easiest decision, but sometimes it is what is necessary. “
- Larry Peters

Required actions to terminate a defined benefit retirement plan

  • Decide on a plan termination date
  • Prepare corporate resolutions to terminate the plan.
  • Distribute 204(h) notices to inform affected parties of benefit freeze (45 days before freeze). IRS requirement.
  • Prepare all amendments to reflect the termination, such as freezing benefit accruals, as well as all changes in the law or plan qualification requirements effective on the plan termination date. IRS requirement.
  • Distribute Notice of Intent to Terminate to all Interested Parties (60-90 days before proposed termination date). PBGC requirement.
  • Issue Notice to Interested Parties (10-24 days before filing Form 5310 with IRS). IRS requirement.
  • File Plan Termination Determination Letter Request (Form 5310) before PBGC Form 500 is filed. IRS approval in 9-12 months.  IRS requirement.
  • Issue Notice of Plan Benefits to inform affected parties of their benefits and how they are calculated before filing PBGC Form 500. PBGC requirement. 
  • File Termination Notice and required schedules (assumed Standard Termination-Plan Sponsor will fully fund Plan) not later than 180 days following plan termination date.  PBGC approval expected within 60 days. PBGC requirement.
  • Distribution of benefit election forms.
  • Notice of Annuity Information (not less than 45 days before distributions) to provide participants with information about the annuity provider.
  • Distribution of Assets (by later of 180 days after PBGC approval or 120 days after IRS approval).
  • Notice of Annuity Contract within 30 days of distribution of assets to provide participants who elect an annuity with information about the annuity purchase.
  • File PBGC Form 501 Post-Distribution Certificate within 30 days after all plan benefits are distributed.

Lawrence R. Peters

Larry is a Senior Consultant at Westminster Consulting, LLC and is based in Princeton, NJ, Larry leads the Firm’s defined benefit practice. His experience includes plan design and funding, mergers and acquisitions, executive benefits and vendor benchmarking, among others.

Prior to joining Westminster...

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