Sponsor Switches Prototypes - How much grace period?

[BeanCounterBlues]

401(k) Plan sponsor switches recordkeepers early in 2008. Old recordkeeper supplied prototype as part of service, new recordkeeper does not. Old recordkeeper was also TPA (bundled arrangement).

Plan sponsor engages new independent TPA (new recordkeeper only "keeps the records" doesn't ADP test, offer prototype etc) who will assist with ADP testing etc and also fills out prototype based on plan sponsor's desired provisions (basically mapped from prototype of terminated recordkeeper).

How much gap is permitted from the time the assets move from the terminated recordkeeper (assume that recordkeeper states as most do that prototype can no longer be used once assets are no longer w/ said recordkeeper) until the adoption of the restated prototype? If done w/in the same plan year is this okay?

Thanks for any help.

[JanetM]

I don't think I have ever heard of time period for transition. Call around to other TPA or CPA firms to ask about adopting their prototype.

[J Simmons]

I would look to the language of the old prototype plan, any agreement between the old prototype sponsor and the ER, and any letter/notice from the old prototype sponsor to the ER to determine how much "tail" time there might be.

The more critical issue is whether the deadline for an amendment has occurred from the time that the old prototype adoption ended and before the new prototype is adopted. In that interim, a mandatory amendment deadline might have been missed and you'd possibly need an EPCRS correction for interim amendment failure. That's because even if the old prototype's sponsor timely signed the mandatory amendment for its prototype, but that was not so signed until after the adopting ER-prototype sponsor relationship had ended, then the old prototype sponsor's so signing that amendment would not apply to the ER's plan.

[Peanut Butter Man]

According to Rev. Proc. 2005-18, when the plan sponsor left the prototype sponsor, the plan became individually designed. The plan sponsor can keep that plan document, and maintain it as an individually designed plan following the 5-year cycle in Rev. Proc. 2007-44 based on the last digit of the plan sponsor's EIN.

If the plan sponsor does not want an individually designed plan document, the plan sponsor can adopt another plan sponsor's prototype. If the plan is a defined contribution plan, you will want to restate onto the EGTRRA pre-approved plan document by the earlier of April 30, 2010 or the end of the 5-year cycle provided in Rev. Proc. 2007-44 based on the last digit of the plan sponsor's EIN.