Accounting, Payroll & Pension Issues/Conversion of profit sharing plan to 401.K
Dental practice is in the process of closing. A profit sharing plan has existed many years. There is one active participant and 2 seperated employees with funds still in the plan.How does one go about closing the trust and filing final returns. ( return form #)
The subject does not match the question. I'll assume that you want to completely close down the plan rather than convert it to a 401k plan. If this is not correct, write me.
There are a number of things that must be done to close down the plan. It would be best if you coordinate with the organization that helped you set up the plan.
Among the items that must be completed are:
1. A record of action terminating the plan should be completed by the business entity that established the plan.
2. The plan must be amended to bring it up to date with all changes in the law and regulations that took effect after the last time it was amended.
3. It is best if all assets are converted to cash.
4. A final accounting should be completed to allocate all investment earnings or losses since the last valuation.
5. Distribution forms should be completed by you and the two former employees.
6. Distributions should be made based on the elections made by the three particiupants.
7. A final 5500 and appropriate attachments should be filed with the IRS.
8. The distributions should be reported to the IRS on forms 1099R.
As I indicated above it would be best if you work with someone who is experienced with handling retirement plans. Please do not rely on my answer as being complete or as legal advice.