Late SH plan amendment

[DTH]

The plan is drafted on a prototype. A plan sponsor was given a form to request that their plan be amended to a safe harbor plan. At the top of the form is a title "Safe Harbor Amendment," but when you read the form it states that the form is used to request the plan to be amended to a safe harbor plan.

The plan sponsor elected the basic safe harbor match beginning 1/1/05, signed the election form before 1/1/05, and provided eligible employees with the 2005 and 2006 safe harbor notices on time. Can the employer rely on this election form as a plan amendment?

If no, what has been the forum's experience where the plan provided the notices on time, administered the plan as a safe harbor, but failed to amend the plan? If the plan sponsor files under VCP, do you think the IRS would allow the plan sponsor to treat the plan as a safe harbor beginning 1/1/05? I have heard they are tough on this issue.

[Jim Chad]

Was this form to "request" amendment signed by the Employer or Trustee?

Could this just be "flowery" wording by someone who is even more verbose than me?

[DTH]

Yes, it was a form to request a SH plan design, but the title was Safe Harbor Plan Amendment. The plan sponsor thought the form was an actual amendment, checked the SH formula they wanted, signed it before the effecive date of the SH plan year, and provided Eligible Employees with the SH Notice on time.

[QDROphile]

So if the form has been a safe harbor amendment, what would the plan sponsor have done to adopt the amendment properly? For example, if the plan sponsor were a corporation, the proper procedure may have been for the Board of Directors to adopt or approve the amendments, independent of the act of putting a signature on the page. The documentation of the action taken to adopt the amendment, or to authorize the signing of the amendment document, may itself be sufficient to pass the requirement for the formality of amendment even if the signed "amendment" document was not the correct document.

I am being somewhat facetious. It looks like your plan sponsor operates at such a low level of consciousness that it would not even wonder what adoption procedure was required to precede the signing.

[Jim Chad]

I am not saying this is right. But it is as much of an amendment as I have often seen. I would suggest preparing a Summary of Material Modifications and distribute copies as soon as possible. Since they did receive the SH notice, doing this now isn't too big a deal.

Any ERISA Attorneys want to weigh in?