Retroactive Amendment?

[Guest tintree73]

Am I missing something here. We just bought a company (Company A) and assumed that company's 401(k) plan.

I have been going through the plan document and amendments (to acquaint myself, etc.) and noticed that five years ago, Company A bought Company B in December. Company A then amended Company's A Plan (the one we just assumed) - but the resolution and the amendment are signed the NEXT August.

The amendment basically incorporates the provisions of the asset purchase agreement (recognizing eligigiblity and vesting service for the acquired employees, etc.).

My question - this appears to be a retroactive amendment. Shouldn't this resolution and amendment have been done prior to the closing date of the sale - or is there some extended amendment period?

I'm mainly concerned because we assumed the plan - which means we take on the plan's past liabilities, etc. Should I be concerned?

[austin3515]

Errors more then three years ago probably are not an issue because the years are closed for IRS audit purposes...

[R. Butler]

You've only given limited facts, but it doesn't sound like there were any anti-cutback issues. It sounds like Co. A's plan was just giving predecessor service credit Co. B's employees. Is that correct? If so I wouldn't be overly concerned. You probably should though contact your plan's counsel & let them review the issue thoroughly.

[Guest nsacramento]

We go through at least 3 asset purchases a year, sometimes we have an acquisition or 2. I'm not clear as to why an amendment was even done because plans generally have a provision for successor companies that allows for the continued vesting schedule. However, we do incorporate an amendment when we merge the plans. Maybe that is what occurred? When merging plans, one plan must recognize the other plan through the amendment. This is not always done at the time of the asset purchase, actually it hardly ever does. Because it takes months to merge plans, the amendments are not done until its time to finalize the trustee to trustee transfer. As long as the amendment does not adversely affect participants benefits, I don't see it being a problem. Also, the auditor's would have looked at it and made a comment if they thought something was wrong.