amending automatic rollover threshold to $1,000

[Guest tas]

Many small plans will be amended to reduce the automatic rollover threshold to $1,000 by 3/27/05 because the compliance with the new automatic rollover rules in too cumbersome.

However, many have participants, terminated prior to this amendment date with balances between $1,000 and $5,000, who have not elected to take their benefit and have not been paid out (perhaps some are lost).

How does this impact the plan? Will plans in this situation still have to comply with the new rules, at least with respect to the balances of the prior terminated participants? If so, many employers should begin an intense effort to eliminate these balances by 3/27! Or, can an amendment to lower the threshold apply to those prior term's?

[stephen]

There are several threads that have addressed this topic in January.

I suggest you search for IRS 2005-5 on this website or perhaps someone will add links to those threads here. (pax?)

Corbel posted additional information earlier this week.

Perhaps the service will extend the deadline for making these amendments

[E as in ERISA]

I don't know if this link works, but I asked a similar question here. And I don't think anyone answered.

http://benefitslink.com/boards/index.php?s...opic=27448&st=0

[Guest tas]

Thanks for the link to the earlier post. It would be nice to get an extension and/or further guidance on this issue (a million dollars would be nice too). We would like to send initial correspondence to our clients asap and this has been the last sticking point.

Our Datair amendment does state that the reduced threshold applies to anyone "terminated after 3/27/05" -

I guess we're going to take the position that plans that have gotten "stuck" with $1,000-$5,000 term. balances will have to comply with the new rules with respect to those balances. We're going to have some unhappy clients.

[E as in ERISA]

Corbel was smart enough to apply the amendments to DISTRIBUTIONS after March 28. I think that is a better answer.

http://www.sungardcorbel.com/News/Docs/IDPRolloverAmend.doc