Restatement of Merged MP Plan

[Guest Chris Compton]

I am under the impression that a MP plan terminating as of 12/31/01 that distributes plan assets prior to that date can satisfy GUST restatement requirements by being covered under the surviving PS plan restatement, provided that there is sufficient language in the document and corporate minutes. Is there any difference if the assets were not merged into the surviving PS until after 12/31/01.

Further, if a MP or PS plan terminates effective 12/31/01 but doesn't distribute assets until 2002, does the plan need to be restated?

[rcline46]

A GUST restatement is required for EVERY plan in existence after 12/7/94 when GATT was passed. If in existence after 1/1/99 change that to GUST II. Does not matter if terminated and distributed, merged, or on going.

If merged you can put the restatement into the surviving plan document but you must include ALL of the stuff which is different for the disappearing plan than that of the surviving plan. THis is too much work so it is recommended that the MPPP be restated before the merger, then merge, then restate the PSP including the fact it has MPPP money in it which will ALWAYS be subject to the joint and survivor rules.

In my opinion any other method costs too much for product generated, but others have their own opinions.

[Guest LKHartnett]

I too have been concerned about how the amend/restate process fits in with the merging process, and have been most concerned about efficiency. I would agree with rcline: that merging first and then amending is more trouble than it's worth.

Here's the approach we're taking:

1. Draft 2 amendments for MPP:

a. GUST amendment

b. "Zero contribution formula" amendment

2. 204(h) notice

3. Corporate Resolution to merge plans

4. Amend & Restate PSP for GUST & EGTRRA. Provide for any separate provisions for MPP assets (QJSA, etc.)

5. Register MPP assets/accounts as PSP at the financial institution, but continue to maintain separately. Get account value as of registration date for purposes of 5500.

6. File final 5500 for 2002 (when the time comes to file, of course).

Any comments are welcome.

[jaemmons]

Interesting point in the "Ask the Experts" session of the Mid-Atlantic Area Employee Benefits Conference (Phila,PA May 2002).

Question 32. "Does a money purchase needs to be updated for GUST before it is merged into a profit sharing 401(k) plan?

NO

Seems pretty emphatic to me, since this was the same answer given at the ASPA conference the previous October.

Some practitioners feel that you should at least have the GUST I/II amendments but I have consistently been informed that as long as the plan into which the MPP is being merged is amended and restated for GUST, there will be no qualification problems with the old MP plan. If the plan were terminating then it would need to be updated for GUST I/II since there will be no continuance of plan benefits after the termination date.

All of your other steps I feel are in line with normal practice procedures.

[Guest LKHartnett]

I guess I get nervous about all the retro-fitting to accommodate both money types . . . but I suppose that it's the nature of the beast when you merge these plans, regardless. Groan.