Timing for Adoption of Amendments at Plan Termination

[Guest CAG1]

Does anyone have a cite that details the actual timing for adoption of final required amendments at plan termination?

2007-44 says a terminated plan may be filed no later than the later of (1) one year from the termination effective date or (2) one year from the date on which the action terminating the plan is adopted.

If a profit sharing plan is going to terminate as of 7-31-08 is it sufficient to have the final termination amendment including EGTRRA and all other provisions applicable as of the termination date adopted by 12/31/08? Or by the due date for filing the employer's 08 tax return? Assume that the ER will not file a 5310.

Any input is most appreciated!

[John Feldt ERPA CPC QPA]

I think efforts must be taken to amend the plan for all required law changes before the date of plan termination. After the plan is submitted to the IRS, the IRS reviewer can require additional amendments as they see fit in order to bring the plan language to meet their requirements. If the plan is not submitted to the IRS, there is no further amending possible after the date of plan termination. I think any amendments taken (other than those dictated by the IRS reviewer of the Form 5310) would negate the plan termination date itself, thus reopening the plan. I could be wrong, but that's my take anyway.

[Bird]

I think efforts must be taken to amend the plan for all required law changes before the date of plan termination.

I agree. If that's a problem, and you wanted to cease all contributions sooner rather than later, I think you could adopt an amendment doing so, and then formally terminate the plan later, along with the final required amendments.

(Yes, I know that ceasing contributions is probably effectively terminating the plan, but I believe that would be primarily for vesting purposes and does not mean that a later amendment for required provisions would be "too late.")

[John Feldt ERPA CPC QPA]

Also, if you are not going to the IRS, be sure to have the applicable HEART Act language adopted too - it was passed June 17, 2008 and it looks to me like some of that applies now to all qualified plans.