Should question 5(a) on Schedule I, has a resolution to terminate the plan been adopted Y/N, be checked "Y" if you are merging your money purchase pension plan into your profit sharing plan? Technically, it's not a plan termination because we're not vesting everyone 100%. However, this will be the final 5500 for the plan, and we have checked the final box. It seems to me that since the final box is checked, the DOL probably expects the plan to be terminated. What are others doing?

I think that as long as you show the transfer (both the dollar amount going out and the plan to which it is being transferred), then the DOL will understand. No need to mark it as a termination.

I was told that you needed to mark yes as a termination, since if you mark final filing, the DOL is looking for yes, the plan terminated. I had the same concern in plan mergers, since we weren't 100% vesting.

I'm not aware that any clients have had a problem reporting it as a merger and reflecting the transfers. I think that is the correct way to report it.

I'm with Katherine. If you indicate there was a resolution to terminate, the participants and the Service will be looking for 100% vesting.

I would think it would be more likely that the EFAST system would look at it being a final return and question why it was not marked as terminated. In an event the plan was audited, it would be an easy explanation if they questioned why the terminated box was checked and 100% vesting was not provided.

Either way, I think there may be a need for explanation, but I don't really think it matters one way or another how it's done.

I guess I am more concerned than you are as to the participants making an issue over it.

I say let the participants eat cake.

At which point, someone will undoubtedly cry....off with your head!

I lean toward answering the question in the way that is legally correct ("No," there has not been a resolution to terminate), and only changing the answer to "Yes" if you can't get the DOL to accept that answer (I believe that they will accept the "No" on a final return that shows transfers out to an identified plan).

You might want to check out Janice Wegesin's (sp?) website. form5500help.com. She indicates that 4j and 5k MUST be completed as though the plan was terminated. We've been doing it that way and plan to explain to an auditor why we didn't 100% vest. Versus explaining a final filing to the DOL without these boxes marked. As noted above, either way requires an explanation.
michele