When a retirement plan no longer suits the needs or objectives of the client company and/or its employees, it may be time to terminate or switch to a different type of plan.
Clients need information to support their decision, and they also need support to carry out the plan termination. It’s important for participants and those with fiduciary responsibilities to know that the process is being handled professionally and that there will be no unexpected repercussions.
That’s where PSI’s ‘A’ team can help. Our accountants, actuaries, attorneys, and administrators are knowledgable about satisfying legal, financial and regulatory criteria when a plan is terminated.
And if the client wishes to design a new retirement plan based on evolving criteria, PSI has the resources and background to bring to bear on the transition.
Retirement plans can be terminated for a variety of reasons. One, of course, is bankruptcy. Another is merger, or the sale of the company to a new entity. A third reason for termination is when the existing retirement plan no longer fits the business model and a new type of plan is desired.
The same attention to detail that was invested in creating and establishing the retirement plan can be applied to its termination. In both cases, there are a thousand details. Fortunately PSI has a deep well of experience.
Our attorneys are knowledgable about ERISA and rulings affecting plan endings. Administrators who work day in and day out on retirement programming have the tools to determine what needs to be done for employers and employees during termination.
Among various responsibilities, PSI can help:
- Calculate participant balances, taking into account contributions that were due prior to the termination date.
- Verify that the original plan includes the right to terminate, and establish a plan termination date.
- See that the plan complies with legislation that was effective prior to the termination date.
- Conduct an audit to assure operational compliance, and to avoid IRS penalties.
- Request determination letters regarding all plan amendments and termination.
- Ensure that all necessary forms and reports are filed and that there are no penalties owed to the regulatory agencies.
Termination, like plan design, must conform to the individual client company. At PSI, we strive to apply our experience and our systems to facilitate situation and bring it to a clean conclusion.
In addition, PSI can provide seminars and consultations for clients and for participants to help guide them towards the next step.
Very few retirement plans are constructed with an eye to termination. However, the skills and depth of our expertise can be applied just as skillfully to a clean finish as to a fresh start.