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August 07, 2014

Terminating a “government” retirement plan


Terminating a “government” retirement plan
Source: Employee Plans News, Issue 2014-11, dated August 4, 2014

The Internal Revenue Service August 2014 Issue of Employee Plans News has a number of articles concerning terminating an employee defined retirement plan including the following [Click on the text highlighted in color to access the information posted on the Internet):


Terminating a retirement plan

Plan amendments required before termination

Also considered are Internal Revenue Code Section 401(a)retirement plan established and maintained for the employees of:
  • the United States or its agency or instrumentality;
  • a state or political subdivision, or its agency or instrumentality; or
  • an Indian tribal government or its subdivision, or its agency or instrumentality (participants must substantially perform services essential to governmental functions rather than commercial activities.)
Other types of governmental plans include:
  • 403(b) tax-sheltered annuity plans [These plans are also referred to as Tax Deferred Annuity Plans in which participation is typically limited to employees of an educational entity. See, for example, Education Law Article 8-C, SUNY’s Special Annuity Plan];
  • 457 deferred compensation plans;
  • qualified excess benefit arrangements; and
  • Certain grandfathered 401(k) plans adopted by a governmental entity before May 6, 1986.
The IRS will also conduct a “webinar” on August 14, 2014 at 2:00, EDT, focusing on how the IRS defines the date of termination, final funding requirements, Pension Benefit Guaranty Corporation (PBGC) issues, reversions and what is needed in a notice of intent to terminate the plan.
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