Whether or not you’re working with an ERISA attorney to wind down your ROBS plan, here are a few pointers for ways to minimize the hassles and expense of closing down your corporation and your plan.
Perhaps you’ve sold your ROBS business, or you’ve just decided to close down. What next? Several steps are required to get from Point A to completely closed down. The details will surely vary depending on the circumstances, but here are some preparatory steps you can take to wind down as efficiently as possible.
Locate all Plan Records.
You are required to maintain copies (signed) of all plan documents from the beginning of the plan until it is terminated and the final 5500 is filed. This includes—
- Adoption agreement(s)
- Base plan document(s)
- Trust agreement(s) (if they are separate from the AA and BPD)
- All amendments adopted during the Plan’s existence.
You will also need the EIN of the plan’s trust – this is a different one from the EIN of the corporation.
Locate all Corporate Records.
The ROBS corporation has a life of its own separate from the plan. Do you have all of the appropriate corporate records? These would likely include at least the following:
- Corporate minutes and/or signed consent actions
- Stock ledger
Get In Touch with the Plan’s Various Service Providers.
Contact the customer service representatives at the following key players, who will be needed to get the Plan’s money moved correctly after the corporation is liquidated, and to get all compliance wrapped up:
- Third-Party Administrator – this is the company that prepares your Form 5500, such as Guidant or Benetrends or LRS.
- Fund Custodian – this is the institutional investment company where the plan’s regular (cash) contributions have been held for its participants over the years, for example, Fidelity or Vanguard or American Funds, etc.
- Bank – if your ROBS plan account still has a checking account open, you will likely use this account to receive the liquidating dividends owed to the plan as a shareholder. If that account is no longer in existence, you may need to re-open one for the plan, depending on your circumstances.
- ERISA Attorney – it’s a good idea to have an attorney familiar with the rules applicable to a retirement plan to review (or actually document) the transactions to ensure compliance.
Decide How (and Where) to Take your Distribution.
Your plan account, after liquidation of all of the stock, will contain your complete retirement savings. Where would you like that money to go? To yourself? If so, you could elect to receive a taxable distribution. Or you may prefer to send some or all of the account to an IRA or to another qualified retirement plan. If you want to elect to roll your plan account into an IRA, you should identify an IRA custodian who can help you with their process of receiving your rollover contribution from the ROBS plan.
If you use the above set of items as a preliminary to-do list, you will likely feel more prepared to guide your ROBS corporation and plan through the winding down process.