restatement for off plan year who is terminating

[Guest terid]

I have a plan who wishes to terminate and they do not want to pay any restatement fees.

This client is in the middle of their plan year ending 10/31/02 - do they have to go through restatement if they are terming their plan now?

[mbozek]

Yes- plan must be amended for all changes in effect in the year of termination. If the plan is an M or P plan the M & P sponsor shuld have a set of amendments that can be adopted. Presumably the employer will only have to adopt the gust changes. Employer could submit the plan for termination with the gust amendments. The client can terminate the plan without the IRS approval -- but there is a disqualification risk if the plan is audited in a later year. I dont see how the cost of IRS approval is that significant .

[RTK]

If an individually drafted plan, I have generally prepared a termination amendment with the required GUST changes (plus other desired changes), and have not prepared a restatement. Often, this results in a fairly short (and relatively inexpensive) amendment.

[Alf]

The approach I suggest is to file it with the IRS as is. They will send you a list of amendments they require along with their sample language that can pretty much be adopted as is. When they say "restatement" what they really want is a working copy that can even be done by hand with circles and arrows if you want. It will be sloppy, but you don't care in a terminating plan. Another advantage to this approach is that the IRS will never catch everything that has to be amended, so your amendment will be much shorter that it would be if a TPA or lawyer drafted it. Good luck!