Prototype with Non-Prototype Amendments?

[Guest Michelle W]

Are you able to utilize non-prototype amendments with prototype plans? Let me explain: We took over an existing plan with a prototype document from the prior TPA (TPA changed; investment co. didn't). Client no longer receives amendments from prototype provider. Many of our clients are on a volume submitter plan with well-known national company (provided to client via us). We purchased the amendment from vol sub provider to use with our clients (not adopted at sponsor level; each employer must sign). Can this amendment also be used for our new prototype client? Assumptions: prototype doc has no language restricting use by other TPAs/we understand we cannot rely on the prototype's determination letter. Thanks.

[Below Ground]

For the short term you should be okay with "Good Faith Compliance Amendments". Of course, I would try to get the Client to switch over to the document you use ASAP.

[Guest Michelle W]

I wonder what would happen if the IRS came knocking on the door to perform an audit?

[Belgarath]

There is absolutely nothing inherently wrong about amending a prototype using non-prototype language. As you mentioned, you can no longer rely on prototype status or favorable opinion letter, so your subsequent language/filings will need to take this into account. I'd have them sign an 8905 immediately if you plan to subsequently move them into a pre-approved document.

[Guest Michelle W]

Thanks everyone for your help.

[Kevin C]

If the amendment under discussion is a good faith amendment for the final 401(k) & 401(m) Regulations, I don't think you lose prototype status or reliance on the opinion letter of the prototype.

From Notice 2005-95:

Maintaining the Pre-approved Status of a Pre-approved Plan

The Service will not treat the adoption of good faith plan amendments that reflect the qualification changes listed in sections 4 and 5 of this notice as affecting the pre-approved status of a master and prototype (M&P) or volume submitter plan. That is, M&P plans may be amended by the M&P sponsor (and, if applicable, the adopting employer) without causing the plans to fail to be M&P plans. Similarly, volume submitter plans may be amended by the sponsoring employer or the practitioner, if authorized under the terms of the plans, without causing the plans to fail to be volume submitter plans. In either case, the amendment will not result in the loss of reliance on a favorable opinion, advisory, or determination letter, if the amendment causes the plan to fail to satisfy § 401(a) and a retroactive remedial amendment is adopted within the applicable five or six-year remedial amendment cycle.