Retroactive Amendments

[oriecat]

Is it ok to make a retroactive plan amendment to change the plan name and sponsor? Our plan has included the words "long term and temporary disability" in the name, even though those benefits were dropped several years ago. I would like to change the name to just "Welfare Benefits Plan" or something more simple like that. Also the plan is currently shown as sponsored by one of our companies, which now only has 4 employees, I would like to switch it to shown as sponsored by the main company (300 ees). Can we go back and say that this change happened at the new plan year (Nov 1st) or should we wait and make the changes next year? I am just trying to get all of our plan stuff cleaned up.

Thank you for any thoughts!

[GBurns]

I cannot see why there would be any need other than ego?? to want to make these changes retroactively. Everyone and everything already knows and shows the name as it is.

As far as the adoption goes it should not be retroactive or backdated. If it comes up in an audit or litigation, it will be a major problem.

If you really want to make these changes either do it currently or wait for next year.

Bear in mind that you are not just making a change in name and sponsor, you seem to be either merging two plans, or terminating the old plan and allowing the 4 employees to join the other plan that has 300ees. If either of these are what you are doing, the issues are other than what your post covers.

[oriecat]

We only have one plan, and it covers both employers. Both employers are owned by the same 100% shareholder, closely controlled. Is it necessary to terminate the old plan instead of simply transferring the sponsorship?

My reasoning behind being retro would be so that next year's 5500 would all be as the newly named and sponsored plan. Does that matter? Or would the 5500 be filed as whatever the plan was at the end of the plan year? It just seemed like it would be better to be the same plan for the whole plan year. But I don't really know about these things.

Because of the changes in past years, most of our insurance contracts come under the name of Company B, but use Company A's EIN, since that is the EIN of the plan. That's why I wanted to get these changed over, so it is all under Company B. It's all inconsistent and a mess. So I'm trying to get it cleaned up, and this seemed like a simple place to start.

[Mike Preston]

It *IS* a simple place to start. Have corporate resolutions drawn up which change the name of the plan and transfer the plan sponsorship to B. It in no way is a plan termination. You file the 5500 based on the plan name and sponsor at the end of the year. Easy peasy.

The only thing I might be concerned with is the underlying contracts. I would contact them first to make sure changing the name of the plan doesn't violate the contracts in any way. I don't think it should, but it doesn't hurt to be safe.

[chris]

If you've got two employers, i.e., two separate corporations, then you've got two plans, not one. Are all of the provisions in each plan exactly identical? How many 5500's have you been filing in the past? One or two? Also, what about qualification issues in the one affecting the other, i.e., Company B will take on whatever liabilities there are within the plan once it adopts it? I know you said the same person is the 100% shareholder of both companies, but the liabilities of Company A are Company A's and those of Company B are Company B's, unless Company B wants to assume them which it will do with respect to Company A's plan if it adopts it. How can Company A be using Company B's EIN?

[oriecat]

Thank you for your responses, Mike and Chris.

We file one 5500. (They were filed as a GIA previously, but we just filed one as single employer, since the premiums were not paid out of a trust. The instructions make it clear that closely controlled corporations are a single employer plan. Right?) We only have one insurance contract (with each carrier). The terms for each company are the same, except for an additional ER contribution. I am not following what you are saying about the liabilities. Each company pays their correct share of the premiums, but then it is all lumped together for experience and claims purposes.

The problem with the EIN is because since Co B is the big company now, that's who everyone thinks we are, so they use that name, but then they have the EIN for the plan (Co A) on file from before, so they use the name they know with the EIN they know, and it gets all mixed up. That's why I am trying to fix it now that I am involved with it.

[Mike Preston]

You are on the right track. One 5500 is fine, as you have only only plan.

[oriecat]

Thank you, Mike.