Plan Document Amendments

[Guest Karenm]

I have a client that was recently acquired in an asset acqusition. In the process of deciding what to do with the Plan, it was discovered by the new TPA that the Employer failed to adopt the final 401(k) regs but in addition, was operating under plan provisions that were clearly out of line with the intent of the employer and the plan's operation. Really weird problems like the employer had requested the prior TPA amend the eligiblity requirement for participation in the 401(k) deferral benefit but the TPA just amended all eligibility (very weird "amendment" also, like a paragraph that said eligibility was changed, no signature, no board vote, etc). The client really was not very detailed regarding document review and assumed the TPA was capable for amending their own prototype (very small doctor's office) and proceeded to operate in line with their intentions to amend the 401(k) eligibility but leave the 1 yos and age 21 for other ps and match eligiblity.

In addition when this prior TPA updated for EGTRRA, they selected provisions that were just wrong such as indicating that participants did not have investment discretion (they had always since inception), that the Plan did not intend to comply with 404 ( c ) (when it had in the past and continued to from the employer's perspective), etc.

I admit the client just took this adoption agreement and signed and when the new TPA pointed out the errors and recommended amending, the client kind of frooze and did respond.

In July 2007 the client was acquired and termination was the next step but in the process of making the termination decisions the TPA advised the lawyer that the document was random and asked how to proceed. I was in the process of writing the lawyer (not a ERISA lawyer) about alternatives for VCP submission to be included with the TPA's response regarding termination alternatives (to submit or not to submit). I understand the lack of the 401(k) final regs could probably fall under the operational failure but this is the first time I read the Rev. Proc. and was wondering what to recommend regarding the random errors.

Finally, the errors did not result in other operational errors and there is no other corrections other than the Scrivner errors and the failure to timely adopt the 401(k) final regs amendment.

Soo, should I proceed to corrections with this question or can someone address this here. Thanks for any help.