What are the steps to terminate a saveday 401(k) plan?

Terminating a 401(k) plan can be a complex process. It's important to note that only the Trustee can fulfill these responsibilities per IRS regulations.

Here's an overview of the termination process:

1. Sign, Date, and Initiate: The task will involve a series of questions about why and when you've decided to terminate the plan. The Trustee will need to sign and date a plan termination resolution and plan termination amendment. Saveday will initiate the termination process once all the required documents are completed and approved. The plan will remain active until saveday notifies you that the termination process has begun.
2. Send Documentation: Once we receive all the signed documentation, our team will commence the termination process. This process can take anywhere from 90 days to a year to complete due to various factors.
3. Notify participants of the plan's termination: As the plan begins to terminate, Saveday will provide all participants with a plan termination notice containing instructions on how to request a distribution of their plan assets. Throughout the process, Saveday will send two additional plan termination notice reminders. This ensures compliance with IRS and DOL requirements and allows us to facilitate distributions for participants who fail to provide distribution directions.
4. Complete the required final account review: During this phase, saveday will assist in resolving any outstanding corrections before closing the trust account. It's important to note that distribution requests will be put on hold until the account review is completed.
5. Process participant distributions: Once the account review is finished, the Saveday team will process participant distributions as requested during the remainder of the process.
6. Complete required plan compliance testing: Saveday will guide your plan through the necessary steps to ensure the plan termination is conducted in compliance with IRS regulations. This includes completing any required non-discrimination testing.
7. Empty and close the 401(k) trust: After processing all distribution requests, saveday will work towards emptying participant accounts for those who have not responded or cannot be located. Timely response to all tasks related to missing participant information is crucial for the distribution of account balances. It's important to note that the trust account cannot be closed and the plan fully terminated until all assets have been distributed.
8. Submit the final Form 5500 filing: Saveday will prepare and file the final Form 5500 no later than seven months after the trust account has been fully liquidated and closed.

Please be aware that the IRS generally requires plans to be fully liquidated as soon as administratively feasible after the stated termination date. Your prompt attention to all tasks, especially those related to missing participant information, is necessary to meet this deadline and ensure a successful plan termination.