I understand that there are no clear guidelines for terminating a 403(B) plan. If this is so, how does one terminate a plan? And once the plan has been terminated, how can one be sure that the Form 5500 filing requirements are gone? Do the filing requirements continue until the last person has reached 59 and 1/2, etc., or can the plan terminate earlier?

Also, with regard to ERISA statute of limitations, when do they accrue?

Thanks in advance.

Well, the good news is that if you are a governmental employer, you don't have to worry about the Form 5500 requirements. And if the contracts are excluded from being an "employer plan" under DOL regulations (because they are salary reduction only and meet certain other requirements), you also have no Form 5500 requirement. The bad news is that if you do not fall within one of these exemptions, there is simply no clear guidance as to how to proceed, unless all of the purchased 403(B) contracts are individual contracts (or are group contracts which can be split up into individual contracts). The problem is that all the rules governing Forms 5500 call for them to be filed until the trust under the plan has been completely distributed. This is a difficult rule to apply in a situation in which the assets are in annuity contracts or custodial accounts (over which the employer may not have much control) instead of a trust. Presumably, distributing individual annuity contracts or custodial accounts to each participant would work. However, we have run across situations in which an insurance company which has provided a group 403(B) annuity simply has no way to divide it up, or provides a mechanism only at a prohibitive cost. No guidance is available on how long one must go on filing Forms 5500 under such circumstances.
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Employee benefits legal resource site

Carol, if the 403(B) contracts are individual contracts, what is the procedure for termination of the 403(B) plan? Can I assume that the plan is being terminated only in the sense of ongoing employer responsibility, and that the distribution restrictions of 403(B)(7) and 403(B)(11) would continue to apply to the contracts? What is the citation for the differing treatment of group and individual contracts in this regard?

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Mike W.

There is absolutely no authority out there on this one. However, it would be hard to argue that an employer is maintaining a plan if it makes no contributions to the plan, if all of the assets of the plan are owned by participants directly with no employer involvement, and if the employer has no other involvement.
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Employee benefits legal resource site