Leaderboard

Isn't there THEN usually something where the TPA or custodian being abandoned states that they will no longer sponsor your prototype, thus making it (as of the date of termination of service) into an IDP? So the plan sponsor needs an 8905 right away....so they're not on IDP restatement rules. (Haven't thought about it in the context of the no-more-5-year-cycles)

Why wouldn't the "account balance" be the Present value of the accrued benefit a/o 12/31/16, reduced by the payment made in 2017? I must be missing something....

I'd restate immediately (even for free - as we do) because: 1) it's easier to use our document; 2) the plan sponsor probably no longer has reliance on the old provider's opinion letter; 3) the plan sponsor may be in breach of contract (pretty much everyone I worked for had a provision in their contract that said you could only use the document (which was copyrighted) only as long as you were a client); and 4) "maintenance" amendments would no longer apply and the plan could potentially get out of compliance.

It has been a almost 5 years since I was working 401(k)s and ESOPs. Since ESOPs can't be on a prototype it has been 5 years since I worked on prototypes. One thing I would check is if the prototype is linked to the provider in some legal way. I seem to recall seeing some from brokerage houses that had language that said if you leave that firm you would no longer rely on their letters and base document. That caused the firm I worked for to almost always move them to one of our document. I want to say we did offer a discount as this was part of our sales/conversion pitch.

So the bundled provider is asking that you move to your document? Now you have an excuse, er, a reason to charge for the restatement. "We would have been happy to use your current document, but provider X has asked us to restate. Rather than risk a compliance issue down the road, we recommend that the plan be restated now at a cost of X, which represents an XX% discount from our usual fee". Should you be so inclined to discount. Kevin