May a Dormant Corporation Continue its Sponsorship of A Qualified Plan? (Posted May 7, 1999) Technical Tip 4: The following question and answer were from the IRS Q&A session at the 1998 ASPPA Annual Conference: Regarding "orphan plans," must a plan sponsor be actively engaged in business ...? Can a dormant (but legally existing) corporation continue its sponsorship of a plan (with funds held for terminated employees only)? IRS Response: The business must be in existence, but there is no requirement for "active" engagement in business. A legally constituted "dormant" entity may sponsor a plan. Note, defined benefit plans need to make sure the prior benefit structure rules applicable to 401(a)(26) are met. View all Tips © 1999-2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.