Pension Benefit Guaranty Corporation 

77-124 

January 21, 1977 

REFERENCE: 

 [*1] 4041 Termination by Plan Administrator 

OPINION: 

 This is in response to your letter to * * * and subsequent telephone conversations with * * * concerning the above

named pension plan ("Plan"). You indicated the view that the Plan had terminated on or about * * * and requested the

opinion of this Office on that matter. 

As I understand the pertinent facts, the Plan was established on * * *, and favorable Internal Revenue Service

determination letters were obtained on * * * and * * * In the period * * * ("Employer") experienced heavy operating

losses. Since a contribution of approximately * * * was needed for the plan year commencing * * * the feasibility of

continuing the Plan was questioned. 

On * * * a meeting attended by a representative of the insurance company holding the Plan assets, * * *, and * * *

a member of your law firm, was held. At that meeting, * * * expressed the opinion (orally, it appears) that the Plan be

terminated and that the decision to terminate the Plan, if made, should be reflected in the corporate minutes at the next

Board of Directors' meeting. Evidently, no record of the * * * meeting is available, nor is there any record of a decision

to terminate the Plan in [*2] the corporate minutes. Further, the * * * meeting does not appear from your description

to have resulted in any decision to terminate the Plan. 

 Although the local insurance agent states that he had in * * * informed the home office that the Plan was to terminate

in * * * the home office did not act on his information, nor, according to your letter, is there any record of the receipt

of such information by the insurance company. 

The last contribution from the employer to the Plan appears to have been made in * * * in the amount of * * *

Subsequent to * * * only one participant has retired, and he is receiving the benefit which accrued and vested to * * *

The Internal Revenue Service had never been notified of any decision to terminate the Plan as required by 26 C.F.R. §

§ 1.401-1(b)(2) and 1.404(a)-2(a)(2)(vi) (1974), both effective in 1973. 

The Plan provides, in § 10.2, that "the employer may terminate this plan . . . at any time by an instrument in writing

executed in the name of the employer by an officer or officers duly authorized to execute such an instrument and

delivered to the Pension Committee." Further, § 10.2 requires that in the event of termination or of complete [*3]

discontinuance of contributions, the Pension Committee shall have the funds held by the insurance company applied to

the purchase of annuities in accordance with the priorities established in § 10.2(a)-(d). However, no formal written

instrument as required by the Plan was presented to the Pension Committee, nor did the Pension Committee treat the

cessation of contributions to the Plan as a complete discontinuance of contributions by following the applicable

procedure of § 10.2. The Plan Administrator has filed Premium Payment Declarations subsequent to the enactment of

ERISA in September, 1974. 

Whether a plan is terminated is generally a question to be determined with regard to all the facts and circumstances

in a particular case. Based on the above fact situation, we cannot agree with your conclusion that the Plan terminated

prior to September, 1974. Consequently, we cannot refund the premiums paid. 

In view of the above, you may wish to consider advising the employer to proceed with the termination of the Plan

in accordance with the provisions of Title IV of ERISA. 

 If you need further assistance in this matter, please contact * * * of this Office at * * * 

Henry Rose 

General [*4] Counsel