Document Failure - VCP question

[Guest PensionAdministrator]

Recently discovered that a client, who utilized a brokerage house Prototype Plan Document, never had the Plan Document amended for GUST or EGTRRA. Through mergers and change in Brokers, the Amendments were not processed, yet the Plan operated in compliance throughout the years. Would you recommend VCP assistance for this Non-Amender and the resulting Plan Document Failure? What other alternatives can you suggest?

[WDIK]

Would you recommend VCP assistance for this Non-Amender and the resulting Plan Document Failure?

Yes. If, as you say, the plan was otherwise operated in compliance with regulations, the VCP program is a relatively pain-free and inexpensive solution. (At least it has been in my experience.)

[Guest jhall]

Just to tease this out a bit, does a plan's failure to timely adopt a formal good faith EGTRRA amendment throw the plan into nonamender status even if the plan thought it had signed the EGTRRA amendment and operated the Plan (and distributed an updated SPD to participant) as if the EGTRRA amendment had been timely adopted? In other words, do you have to pay the EPCRS fee to correct just because the Plan failed to sign a piece of paper even though the Plan was administered in accordance with the required changes?

[Alf]

Yes, probably. The signature on the amendment is not really what is important. What matters is the adoption of the amendment. SPD/SMM won't do it legally, but if you have adoption by the board of directors for example, the signature on the amendment won't be necessary, usually. Of course, it all depends on what the document requires for effective amendment of the plan.

[Guest jhall]

Alf,

Thanks for your reply. In our case, it appears actual Board Resolution and Plan Amendment were both skipped so there is nothing to point to as having formally adopted the changes. Boss has a hard time believing they cannot just adopt a retroactive board resolution / amendment since we've operated the Plan in compliance.

[Alf]

I understand. In that case, the signature IS that important because that is what legally adopted the amendment by the deadline. If you are really dealing with GUST, then your VCP will be complicated with a determination letter appliation, won't it? Not a cake walk and it will take the IRS more than in year to rule, in my opinion.

Does anyone know whether the updated VCP guidance is going to change the non-amender procedures much?

[WDIK]

If you are really dealing with GUST, then your VCP will be complicated with a determination letter appliation, won't it?

It has been my understanding that filing for a determination letter is optional where the document is an approved prototype. I do agree that the ruling will generally take over a year.