Education/Advice:The Fiduciary’s Role in the Termination of Single Employer

The termination is subject to multiple notice, filing and other requirements imposed by the PBGC and Internal Revenue Service, and, in some cases, the state insurance commissioner.

PBGC Requirements 

• Commence search for missing participants. If a participant or beneficiary cannot be found after a “diligent search,” the plan must either purchase an annuity from a private insurer in that person’s name and provide information on the missing person and insurer to the PBGC, or transfer the value of the person’s benefit to the PBGC’s Missing Participants Program
• Notice of Intent to Terminate provided to affected parties at least 60 but not more than 90 days before proposed termination date
• Standard Termination Notice (Form 500) filed with PBGC no later than 180 days after proposed termination date
• Notice of Plan Benefits furnished to participants, specifying the amount and form of each participant’s plan benefits, no later than Standard Termination Notice filed with PBGC
• Notice of Annuity Information furnished to affected parties at least 45 days before the asset distribution date
• Asset Distribution Date completed by later of (i) 180 days after the expiration of the PBGC’s 60-day review period for the Standard Termination Notice, or (ii) 120 days after the plan receives a favorable determination letter from the IRS provided the determination letter was requested by the time the PBGC Form 500 was filed
• Notice of Annuity Contract furnished to participants and beneficiaries receiving benefits in the form of an annuity within 30 days after plan assets are distributed
• Post Distribution Certification (PBGC Form 501) filed with PBGC within 30 days after the last distribution date for any affected party

• Notice of benefit freeze [204(h) Notice] provided to participants within IRS’s required window before the effective date of the amendment
• Notice to Interested Parties posted no more than 24 days and no less than 10 days before the filing with the IRS of an application for a determination letter
• Determination Letter Request (IRS Form 5310) filed with IRS no later than Form 500 filed with PBGC; IRS will generally respond with a favorable determination within 270 days

State Insurance Commissioner Requirements 

• Establishment of a separate account with an insurer (if that is what the fiduciary decides to do) may require state insurance commissioner filings
• In some cases, the insurance contract must be reviewed by the state before it can be executed