amendment vs. restatement

[Lori H]

How many times can a plan be amended before a restatement should be

done. For instance, a traditional 401(k) plan was restated for GUST

effective 1/1/02. The plan was amended, effective 1-1-03, to a SIMPLE

401(k). Now I need to add two participating employers, change the

name of the plan and amend the plan for quarterly entry. This seems

a lot of change for just a simple amendment. The three companies do

not constitute a controlled group so it wouldn't be a multiple employer

plan. Thanks to everyone who provides a response.

[Lame Duck]

IMHO, you need to consider the extent of the amendments, rather than the number of amendments, especially if you're using an individually designed plan. The document can become unwieldy if there are a number of amendments attached to the plan, making it more difficult to adminster. If you're using a protoype document, it's probably easier to restate the plan than it is to amend it. The fewer things you have to look at, the less chance of an operational error.

[KJohnson]

I agree with Lame Duck from an administration standpoint. From a legal standpoint you can have as many amendments as you want and I have seen plans that only amend up until it is time to seek a determination letter and then they restate. This is because the IRS requires a restatement if you have 4 or more amendments. I guess the IRS thinks that a document with any more than 4 amendments is unwieldly.

This is from Rev. Proc. 2004-6

Restatements may be required

.04 A restated plan is required to be submitted if four or more amendments (excludingamendments making only non-substantive changes) have been made since the last restated plan was submitted. In addition, the Service may require restatement of a plan or submission of a working copy of the plan in a restated format when considered necessary. For example, restatement may be required when there have been major changes in law. A restated plan or a working copy of the plan in a restated format generally must be submitted for a plan that has not previously received a determination letter that takes into account all requirements of GUST. However, see section 3.04 of Rev. Proc. 2000–27 for exceptions to this requirement.