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IRC 401(k) Plans - Terminating a 401(k) Plan

Although 401(k) plans must be established with the intention of being continued indefinitely, you (as an employer) may terminate your plan when it no longer suits your business needs. For example, you may want to establish another type of retirement plan in lieu of the 401(k) plan.

Typically, the process of terminating a 401(k) plan includes amending the plan document, distributing all assets, and filing a final Form 5500. Although you are not required to, you may file a Form 5310, Application for Determination for Terminating Plan, to ask the IRS to make a determination on the plan's qualification status at the time of plan termination. You must also notify your employees that the 401(k) plan will be discontinued. Check with your plan’s financial institution or a retirement plan professional to see what further action is necessary to terminate your 401(k).

Page Last Reviewed or Updated: 26-Nov-2013