PS Cont. Allocation-signed document and unsigned restatement

[Guest Emily 401(k)]

Hello--

I recentely took over a plan and it appears the prior Administrator was using the original signed plan document to allocate the Profit Sharing Contribution each year. There is a restated document but the client never signed that document. The profit sharing allocation formulas are different. The original document has a comp. to comp. formula but the restated document has a cross tesed formula using 3 groups.

Should the Administrator use an unsigned document or was he correct to use the original signed document. Please advise. Thanks.

Emily

[Mike Preston]

The administrator should use the actual document. In my opinion, the prudent course of action is that an unsigned document is not appropriate to use, unless:

1) an ERISA attorney has stated that the administrator should follow specific terms not contained in the signed document

2) the administrator has confirmed, perhaps with their own counsel, that there is at least some basis for the attorney's instruction - such as the belief that the plan was effectively amended through another document, such as a resolution.

[Kimberly S]

Keep in mind that there is rarely anything in a cross tested formula that would prohibit a comp to comp allocation.