Opps - acquiring co. forgot to amend the plan

[Guest Iwonder]

When is the last day by which a plan must be amended when, by virtue of an acquisition, the plan has employees of an acquired company participating in the acquiring co.'s plan, BUT the acquiring company neglected to amend the plan to actually permit the employees of the acquired company to participate.

In this case, the company was acquired 3rd quarter 2007, the employees of the acquired company began to immediately participate in the acquiring co.'s plan.

The acquiring co. has realized that it did not amend its plan to allow for this participation. 14 months have gone by.

Does the acquiring company have until the end of the plan year of the PY (this is a calendar year plan) following the acquisition, etc. etc.? If so, the amendment will be timely.

Or, if the acquiring co. missed the boat on a timely amending, may the acquiring company adopt a retroactive amendment to cover these mostly NHCEs?

Thank you

[Kevin C]

It depends on the type of plan. If you are referring to a 401(k), it must be amended before the acquired employees can defer. If it is a profit sharing or DB, then by the end of the 2007 plan year.

Take a look at Rev. Proc. 2008-50. If you qualify for the correction programs, inclusion of ineligible employees is one of the operational errors mentioned. The correction method includes a retroactive amendment. If this is the only operational error for the time period, you may be able to use the self correction program, SCP.

[Guest Iwonder]

It depends on the type of plan. If you are referring to a 401(k), it must be amended before the acquired employees can defer. If it is a profit sharing or DB, then by the end of the 2007 plan year.

Take a look at Rev. Proc. 2008-50. If you qualify for the correction programs, inclusion of ineligible employees is one of the operational errors mentioned. The correction method includes a retroactive amendment. If this is the only operational error for the time period, you may be able to use the self correction program, SCP.

Thank you Kevin.

This helps alot.

May I ask one more question? I looked at 2008-50. It appears that we can self-correct with a retro amendment, but I am confused as to a submission to the IRS for determination is required. Would a submission to the IRS be required, in your opinion, for just this amendment?

Thank you again.