to restate or not restate?

[Lori H]

Is it a requirement to restate a plan that terminated and paid out all participants prior to 2009? If the plan received all the amendments from the document sponsor and is in compliant, it would seem that plan restatement would not be necessary and that the sponsor would not want the added cost of restating the plan.

Thoughts?

[J Simmons]

By "the plan received all the amendments from the document sponsor" is that the ongoing amendments or the mid-RAP (remedial amendment period) updating amendments?

If you are referring to the ongoing, interim amendments, then the plan documents needs to be updated before the plan is terminated. That is usually easier and less time intensive by adopting a new EGTRRA restatement than having someone try to piece together a specially drafted amendment to cover all the various updates needed.

If the plan's documents are not updated one way or the other, you may find that the plan loses its qualification back to 1/1/2002.

[Lori H]

Hi J.

In Sept they received the amendment package for the Final 415 Regulations along with the MassMutual announcement that their new restated documents have been approved by the IRS and they have until 4/30/10 to restated.

The notice also states that "if your plan has been terminated or amended to another provider's plan document, please disregard this notification." The sponsors plan was terminated prior to the notice being received.

Thanks

[Guest Sieve]

Be careful, Lori. As John indicates, all plans must be compliant as of the date of termination. For example, if the Plan did not terminate prior to the 1st plan year beginning on or after 7/1/2007, then it did not comply with IRC Sectin 415 unless an appropriate amendment was adopted--MassMutual's statement notwithstanding. In that case, it will be very costly if/when an IRS audit discovers that required amendments were not timely adopted. (I think MassMutual was saying not to bother with this amendment in those specific instances mentioned because those plan sponsors obviously terminated properly and therefore already had adopted the Section 415 amendment. It certainly wasn't saying that some form of the amendment was absolutely not required.)

The Section 415 amendment was being distributed at that time because the deadline for adopting it was fast approaching. However, depending on the date of termination, a terminating plan might have been required, as pointed out by John, to adopt other language relating to provisions effective prior to termination (perhaps certain PPA '06 language). Remember, ongoing plans have a remedial amendment period, but that period ends--and the deadline for adopting the amendments is accelerated--when the plan terminates.

[Lori H]

Thank you Sieve.

Mass Mutual is the sponsor of the standardized plan document and the plan is registered with them, therefore the sponsor receives all the appropriate amendments and for the most part adopts the default provisions issued in the amendments (EGTRRA, Lower Mandatory Cash Out, final 415, etc). A resolution was executed in March 2007 to terminate the plan, yet assets were not fully distributed until 2008. Bottom line is if the plan was in force for the first plan year after 7/1/07, restatement is required?

[Guest Sieve]

I think language compliance is required only until plan termination, assuming that distribution occurs within a year thereafter.

In any event, restatement would not be required--just a tack-on amendment. Because there were voluntary employer elections/choices permitted under Section 415, I think those amendments often have to be signed unless defaults are elected (even if part of a prototype). You might want to check out the MassMutual amendment and see if signature is needed and if the default provisions make sense for your plan.

[Lori H]

I just received a response from the attorney who handles their document and restatements are NOT required for plans who terminated prior to 1/1/09 AND ALL ASSETS are distributed prior to 1/1/2010