Situation : 204(h) notices are sent timely last December (12/13) announcing a proposed plan termination effective 12/31/2002 but the plan is not amended to freeze accruals as of 12/31/31; the 204(h) is also used as the 60 day NOIT with a proposed termination date of 2/15/2003; a Board resolution is also signed on 12/13/2002 resolving to terminate the plan effective 12/31/2002.

The plan is insufficient & I contend that a 1/1/03 valuation needs to be performed w/ costs pro-rated for the period from 1/1 to 2/15.

The consultant for the termination work asserts that the 204(h) and the Board resolution are sufficient to end my company's work as of 12/31/2002.

Who is right ??

I'm assuming that the 12/31/2001 reference should be 12/31/2002.

Also assuming (since you reference NOIT) that this wasn't provided until 12/15/2002, implying that your plan is subject to PBGC coverage. Hence the earliest plan termination date that you could use (and that the PBGC would accept) would be your 2/15/2003 date. So your plan termination date would have to be 2/15/2003 and you would have to do a 1/1/2003 valuation. Only way that the 12/31/2002 plan term date could be valid (again assuming that this plan is subject to PBGC coverage) is if the 60-day notice was timely given to participants by the end of October 2002.

Yes, my typing error ; instead of 12/31/31 on the 3rd line it should be 12/31/2002.

If they were sufficient, we'd probably get a funding pass so to speak per Section 4 of Rev. Proc. 2000-40.

thanks for the reply !!!

FWIW, I agree with mwyatt's analysis completely.

Andy, just curious , what is FWIW ??????

For What It's Worth

I agree w/ mwyatt also; but I've been going from memory ; mwyatt, would you happen to have any cite(s) or even a GreyBook question or an EA meeting outline that would additionally support our common contention regarding the need for a 1/1/2003 valuation given the fact pattern ?

Thanks again !!!

See the PBGC rules regarding standard terminations that will confirm when the termination date is allowed www.pbgc.gov. Also, see Rev Rul. 79-237 to spell out for how long the funding standard account must be maintained.

great ! thanks Blinky !!