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Let's refocus the query. Assume circumstances in which, following the change in service providers, nothing in the Internal Revenue Code (including rules, procedures, and other interpretations under the tax Code) requires a change to a document that was stated using a no-longer service provider's prototype or volume-submitter document. But the employer is willing to restate the plan because the employer wants to make the current service provider's work more efficient by letting it look to a form of document on which the service provider has a developed base of knowledge and experience. In those circumstances, is the expense of restating the plan an expense that is reasonable in the plan's administration because it enables the plan to obtain the current service provider's services (or obtain them more efficiently)? For those who worry about whether an otherwise unnecessary restatement can be a proper plan-administration expense, would it change your analysis if the superior service provider were unwilling to accept an engagement unless the plan is restated using the document that the service provider prefers?

...but you may want to phrase it a bit less confrontational.

1) As to the concerns above about the exclusive benefit rule, Reg 1.401-1(b)(4) says "(4) A plan is for the exclusive benefit of employees or their beneficiaries even though it may cover former employees..." 2) The discussion in this thread: http://benefitslink.com/boards/index.php?/topic/19665-terminated-employee-rollovers/ Includes the analysis by mbozek that "Also since former employees are participants they should be permited to make tax free rollovers under the BRF provisions." The discussion references Rev Rul 96-48: http://www.unclefed.com/Tax-Bulls/1996/RR96-48.PDF 3) I think Lou S hits on a key factor: whether the former employee still qualifies as a participant, which generally would mean they still have a balance in the plan. You should review the plan document w/ that question in mind.

Oh, I'm sure they are concerned with it. But let's say the client left out the manufacturing employees because "they are not eligible for the Plan." There is no way that the 316's engagement letter is going to accept any responsibility for that. Nor for the fact that the plan was, unbeknownst to the 316, top-heavy because the owner's daughter had a different last name and was not coded as an owner. Of course I'm not suggesting that they should be held responsible. Only that this is an appropriate analogy: The 316 has locked all of the windows in the house, but they left the front door open. In other words the most obvious problems are unaddressed.