Once a plan termination date has been set and the plan has been filed with the IRS for a determination letter, is there a requirement that all assets remain in the plan until the IRS issues the D letter? What is the suggested course of action, esp given that it could be 6+ months until the letter is issued, and participants have no access to their accounts.

What are sponsors generally doing these days?

Thanks for any feedback!

If an employee has a distribution trigger, like termination of employment, in the meantime, I'd process the distribution.

I would hold off on any distributions based solely on plan termination as a trigger until the IRS issues the d-letter. You have to have some trust corpus to amend, if the IRS insists before it will issue the d-letter. You also do not want to be discriminatory in applying the plan termination as a distribution trigger.

If the client objects to the approach suggested by John, then I often tell the client that plan termination distributions can occur to NHCEs--but, if there are plan termination and other admin expenses to come from trust assets, distributions only to NHCEs may not be an acceptable approach (but, at least there would not be discrimination issues).

Thank you both!!