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Takeover Plan with Prototype


Dougsbpc

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The prototype retains its status as such despite the plan being administered by someone other than the prototype sponsor, so long as the employer continues the document relationship with the prototype sponsor. That relationship is as a 'subscriber' to the prototype document via the adoption agreement (and terms as agreed between the prototype sponsor and the employer).

An amendment to the adoption agreement that simply switches from one of the listed options to another on any design parameter does not render the plan to be individually designed. However, an amendment to vary any of the terms set forth in the prototype plan document, or to attempt a design option not presented on the adoption agreement, will render the plan to be individually designed.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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It is still a prototype. Probably. I have heard some prototype sponsors tell their clients that, once they stop being an administrative client, that the prototype sponsor will no longer maintain the plan. Fair enough. But they go further, and state that any required amendments which are done on behalf of the prototype sponsor's clients (that is, an amendment made to the underlying prototype by the prototype sponsor, without the need for an individual client to execute anything) will NOT apply to their plan and, therefore, as of that first moment when the plan maintained by the client and the "real" prototype plan are different, the client's plan stops being a prototype and is, at that point, an individually designed plan. The prototype sponsor has a vested interest in saying to the client that the plan stops being a prototype the minute it is no longer on the prototype sponsor's list of "clients". I'm not sure that is correct, but it serves the prototype sponsor's interests so I understand why they advance it.

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Another way that the prototype can be rendered to be individually designed is if the employer rejects, for its plan, an amendment that the sponsor makes to the prototype.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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