Amendment

[PS]

Hi, 

Plan was terminated by Sponsor on 12/28/2021. Plan was terminated by plan counsel advice. As a corporate action/ acquisition plan is starting a new plan. Plan counsel is advising that the terminated plan needs to be amended. Do the terminated plan needs to be amended? When a plan terminates we don't ask for an amendment since the letter of Direction Document and the Board of directors resolution captures the  requirement of the plan sponsor's intent to terminate the Plan and this ideally suffices the requirement to terminate the plan.  However since here the counsel has the plan sponsor to do an amendment what kind of amendment will be required? 

Thanks

[Bird]

Not that I really followed what you were trying to say, but maybe counsel who is advising that the plan needs to be amended could tell you what kind of amendment they think is required?

[PS]

1 minute ago, Bird said:

Not that I really followed what you were trying to say, but maybe counsel who is advising that the plan needs to be amended could tell you what kind of amendment they think is required?

Yes, is an amendment required if so, what amendment will be required.  

[CuseFan]

First, all terminating plans must be fully up to date with the law regardless of deferred amendment due dates, so at a minimum the plan would need a SECURE, CARES et al amendment if that hasn't been done. If it's a defined benefit plan, then there might also be an amendment needed to allocate excess assets or pay immediate lump sums. As Bird noted, we're kind of just guessing here as what might be needed, so as suggested go to the horse's mouth (legal counsel) to get your answer.

I agree, we also in general rely simply on the board action to terminate and only do a formal amendment if needed for something other than to simply say "the plan is terminated" - we never amend solely for that.

[Nate S]

Check. Your. Plan. Document.  There's a section in there that will designate what action needs to be taken to effect a termination. Is a Resolution sufficient? Maybe.  In the OP, @PS notes intent, which is not enough.  Ok, so you intend to terminate the Plan.  But, did you?  It's a small semantic difference between intent and what @CuseFannotes, which would be a hybrid resolution that goes on to include the actionable "the Plan is terminated."  A pure Resolution creates the impetus to cause corporate action to then occur.  The amendment of the Plan would then be the action. 

Also, who is signing the Resolution?  Is it the Sponsor who has the authority to amend, or is it the corporate secretary?  Do the bylaws give the secretary the full authority of a corporate officer(usually not), or is the secretary actually just the executive administrator to the president/VP/COO/in-house counsel???

[PS]

2 hours ago, Nate S said:

Check. Your. Plan. Document.  There's a section in there that will designate what action needs to be taken to effect a termination. Is a Resolution sufficient? Maybe.  In the OP, @PS notes intent, which is not enough.  Ok, so you intend to terminate the Plan.  But, did you?  It's a small semantic difference between intent and what @CuseFannotes, which would be a hybrid resolution that goes on to include the actionable "the Plan is terminated."  A pure Resolution creates the impetus to cause corporate action to then occur.  The amendment of the Plan would then be the action. 

Also, who is signing the Resolution?  Is it the Sponsor who has the authority to amend, or is it the corporate secretary?  Do the bylaws give the secretary the full authority of a corporate officer(usually not), or is the secretary actually just the executive administrator to the president/VP/COO/in-house counsel???

We haven't received who will be signing, but I will check on this. Thank you. 

[jsample]

Plan counsel may be referring to the Cycle 3 restatement as an amendment.  Was the plan restated onto a Cycle 3 document?

[EBP]

A terminating plan must be amended to comply with current law. Even if the plan is up-to-date, as a best practice, we always do a termination amendment. Then there's no question if the IRS comes along later. At a minimum, the amendment indicates the termination date, says that no employees become participants after the termination date, says that no more contributions will be made with respect to compensation received or service performed after the termination date, and that all participants are 100% vested as of the termination date.

For plans terminating in 2020, 2021 and 2022, the termination amendment must also include SECURE and CARES updates.

And counsel should provide the amendment.