Plan Amendments

[Gary]

Regarding plan amendments to small closely held companies sponsoring a defined benefit pension plan.

Say a company has an owner who is also the President and Trustee and maybe another owner who is also a director and then maybe a few employees in the company (or not).

When adopting the plan or a plan amendment is it necessary to have a resolution or consent of the Board even if the Board memebers are going to sign the plan amendment, or is the amendment alone sufficient?

Thanks.

[Peanut Butter Man]

We do both the plan amendment and the resolution, even if the same person is signing both because that person is wearing different hats when they sign each one. The plan amendment is signed by the trustee. The resolution is the board of directors ratifying the action of the trustee in amending the plan.

[GMK]

Peanut Butter Man is right. Document, document, document. (Well, in this case, document, document.)

Some years down the road, it may prove useful to be able to present signed documents that verify that the plan was changed (amendment) and that the plan sponsor approved of the change (resolution).

And it doesn't take much longer for the Pres/Trustee to sign two papers vs. one.

[Gary]

Ok, great responses.

Now let's say there are 5 members on the Board of Directors and 3 Trustees.

Do all members have to sign the resolution and amendment? Not a problem to include all names, but it is a good thing to know.

My response would be the resolution might depend on the corporate by-laws and the amendment might depend on what the Plan states.

Of course these things may not be spelled out explicitly in those documents.

Thanks.

[GMK]

What I would expect is that the Board's approval of the resolution is documented in the Board meeting minutes, and a copy of the resolution is filed with the minutes. I would also file a certified copy of the resolution with the Plan documents (certification is usually by the corporation's secretary).

The amendment, which gets filed with the plan document, I would have signed by the President (for the company, assuming the company is the plan sponsor), and by all 3 trustees (for the plan). Yes, if the President is also a trustee, she/he gets to sign it twice.

And yes, you make a good point about checking the by-laws and plan document to see if any other specifics are required.