One of the steps to take before terminating your retirement plan is to make sure your plan has been amended for all required law changes as of the plan’s termination date.
These final plan amendments:
- maintain the plan’s tax-favored status at termination, and
- ensure that distributions to participants are eligible for rollover to other qualified plans or IRAs.
Consult your retirement plan advisor or pre-approved plan provider prior to terminating your plan to ensure that your plan is up-to-date.
- A terminating plan must be updated for all applicable qualification requirements, such as guidance or statutes on the Cumulative List and/or the applicable Required Amendments List.
- You must also amend your plan for any law changes your plan was required to implement as of your plan termination date, regardless which Cumulative List or Required Amendments List the change first appeared (Revenue Procedure 2020-4, Section 15.05 and Section 7 of Revenue Procedure 2016-37).
If you apply for a determination letter when your plan terminates, we’ll let you know if you’re missing any of these amendments.
Determination letter for a terminating plan
Although not required, you can request the IRS to make a determination on the plan's qualification status at termination by filing:
- Form 5310, Application for Determination for Terminating Plan (instructions ), for most pension, profit-sharing or other deferred compensation plans; or
- Form 5300, Application for Determination for Employee Benefit Plan ((instructions ), for a multi-employer plan covered by PBGC insurance or a plan only partially terminating.
IRS reviewer materials
We use the following materials to review terminating plans. These materials were designed for internal IRS use. You might find them helpful in reviewing your own plan, but they shouldn’t be used or cited as authority for a technical position.
- Subject Matter Packages (Alert Guidelines, Explanations and Plan Deficiency Paragraphs)
- Termination Focus Reports – Annual highlights of recent changes in the law that may require plan amendments.