An owner only plan terminates where say plan assets equal 70% of value of benefits.

436 would not allow full lump sum distribution.

Does anyone know of a practical example where such a plan distributed plan assets? And if there were any consequences, violations, damages, etc.?

Point being, if such a plan distributed lump sum to owner, what might IRS do? Anyone know of ramifications? Actual better than theoretical.

Thanks.

Assuming this isn't a PBGC covered plan, and without trying to sound redundant... what does the plan say?

Chances are it contains the standard 4044 priority categories language. If so, follow the categories and pay everyone out.

I think typically the owner waives benefits and takes what is left, but I am seeing more plans just simply following the plan provisions so that everyone gets a little hair cut.

Regarding 436 restrictions, I don't really know what you would do, however there is a school of thought that would say 436 does not apply to terminated plans. I believe it says somewhere that 436 applies whenever 412 applies. 412 does not apply once the plan has been terminated, therefore, 436 wouldn't apply to a terminated plan.

Just a thought.

I believe Jim Holland said at the recent Denver ASPPA/WPBC conference that guidance on this issue was forthcoming and that he thought "we'd like the result". He also said that Rev. Ruling 80-229 is still valid (deals with under fudned plans).

I got to think that means they won't be taking too hard-line of an approach on the <80% AFTAPs and plan terms, but who knows for sure.

Personally I would pay out if that 4044 language is in there and also hang my hat on the above Rev. Ruling.