Partial Discontinuance of a Prototype SIMPLE IRA

[Guest jg062098]

Does anyone know what the obligations (i.e. IRS Notification, Customer and Participant Notification) of a Plan Sponsor of a prototype SIMPLE IRA is when the Plan Sponsor is no longer offering the plan to some of its customers?

The details are as follows: A Financial Institution is selling some of its branches. Those branches offered customers a prototype SIMPLE IRA. Because of the sale, the prototype plan is no longer going to be offered to the existing customers. We know that we need to notify the customers, but are not sure if we are required to file anything with the IRS and have not been able to find any information on the subject.

Any help would be greatly appreciated. Thank you.

[Gary Lesser]

The sponsor of the discontinued plan must notify the adopting employers and the Service of the discontinuance of the plan. So, to the extent of the discontinuance--

From Rev Proc 2000-20: ..."The adoption agreement must also contain a statement which provides that the sponsor will inform the adopting employer of any amendments made to the plan or of the discontinuance or abandonment of the plan."

From Rev Proc 89-13 (NOW OBSOLETE)

APPENDIX

1. PATTERN NOTICE THAT MAY BE USED TO NOTIFY EMPLOYER THAT ITS PLAN WILL BE TREATED AS AN INDIVIDUALLY DESIGNED PLAN

NOTICE

To: (Name of Employer)

On (date plan was adopted) you adopted the (name of plan) regional prototype plan. As of (date of discontinuance), we have discontinued our sponsorship of the plan as adopted by you. The purpose of this notice is to advise you that if you are continuing to maintain the plan and have not replaced it with another approved regional prototype plan or an approved master or prototype plan, the plan will be treated by the Internal Revenue Service as an individually designed plan. As a consequence, if it becomes necessary to amend the plan because of a change in the law or because of regulations or other guidelines issued by the Service, you will not be entitled to continue to rely on any determination letter you received from the Service as to the regional prototype plan's qualified status (or, in the case of a standardized plan, on the notification letter we received). In order to continue such reliance, you must obtain a favorable determination letter as to the qualified status of the individually designed plan.

(signature) date)

2. PATTERN NOTICE THAT MAY BE USED TO NOTIFY EMPLOYER ANNUALLY AS TO WHETHER SPONSOR CONTINUES TO BE A SPONSOR, WHETHER ANY AMENDMENTS HAVE BEEN MADE, AND, IF AMENDMENTS HAVE BEEN MADE, WHAT REQUIREMENTS MUST BE SATISFIED FOR RELIANCE

NOTICE

To: (Name of Employer)

On (date of adoption) you adopted the (name of plan) regional prototype plan sponsored by us. The purpose of this notice is to advise you that, as of December 31, 19 -- , we are continuing our sponsorship of the plan and that [the plan has not been amended in the year ending on that date.]/[the plan has been amended as follows in the year ending on that date: (describe amendment)). The requirements that you must satisfy in order to be able to continue to rely on any favorable determination letter you received from the Internal Revenue Service as to the plan's qualified status (or, in the case of a standardized plan, on the notification letter issued to us) are set forth in section 14.04 of Rev. proc. 89-13, 1989-7 I.R.B.

(signature) (date)

3. PATTERN NOTICES THAT MAY BE USED TO NOTIFY KEY DISTRICT OFFICE AND ALL ADOPTING EMPLOYERS THAT SPONSOR INTENDS TO DISCONTINUE SPONSORSHIP OF PLAN

NOTICE

To: Chief, EP/EO Division

_________ Key District

This is to inform you, in accordance with section 14.05(5) of Rev. Proc. 89-13, 1989-7 I.R.B. , that we intend to discontinue our sponsorship of the regional prototype plan as of ____, 19__. The plan was approved by you on ____, 19__, by notification letter number _____.

(signature) (date)

NOTICE

To: (Name of Employer)

This is to inform you that, as of ___, 19__, we intend to discontinue our sponsorship of the (name of plan) regional prototype plan, which you adopted on (date of adoption). If you continue to maintain the plan and do not adopt another approved regional prototype plan or an approved master or prototype plan to replace it, the plan will be treated by the Internal Revenue Service as an individually designed plan. In that case, if it becomes necessary to amend the plan because of a change in the law or because of regulations or other guidelines issued by the Service, you must obtain a favorable determination letter from the appropriate key district office in order to have continued reliance as to the plan's qualified status.

Hope this helps.