Amending plan for new formula

[Guest Rags]

1) I've gathered that unless a plan is requesting a determination letter due to a required legislative change, there is no "time limit" for amending a plan. Is that correct?

2) Does a board resolution amend the plan (before the actual amendment)? If not, is there a time by which the plan administrator must amend the plan after the resolution has been signed?

[Kimberly S]

What does the resolution say about timing?

[Guest Rags]

The resolution put the change into effect at July 1, 2006 but the plan was never amended.

I may have found a reasonable answer to the first question:

Rev. Proc. 2005-66 Section 5.05

The deadline for the timely adoption of an interim or discretionary amendment with respect to any plan is determined as follows:

(3) An employer (or a sponsor or a practitioner, if applicable) will be considered to have timely adopted a discretionary plan amendment (that is, a plan amendment not described in section 5.01), if the plan amendment is adopted by the end of the plan year in which the plan amendment is effective.

The amendments referred to in the question would be considered discretionary based on this definition, so I'm ok with that.

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The very nature of a resolution is that some governing body has made a decision. That gives me some comfort, but I want to know if, generally speaking, a resolution is acceptable as a form of an amendment to a plan.

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Thanks for your help.

[Mike Preston]

This is a facts and circumstances analysis best performed by counsel for the plan. For example, if the resolution says something like: "Plan X is hereby amended....." then you at least have a leg to stand on. If not, then maybe not.

Gotta go to a lawyer on this one, me thinks.