Plan Audited - Missing Signed Final 401k Reg Amend

[CLE401kGuy]

Directed 401k plan is under audit and is missing a signed and dated copy of the Final 401k / 401m amendment. The plan was using a prototype and the prototype sponsor supplied a copy of the amendment but did not have any signed copies.

The client could not find where the prototype sponsor sent them the amendment, it appears to have been never rec'd.

The IRS auditor has indicated that if no signed correspondence / cover letter regarding the amendment or the signed and dated amendment itself can be found, the plan will go to audit CAP. The auditor indicated that plans of this size (5 participants, under $500k investments) see $3000 - $4000 fines for having a missing restatement. That said, does anyone out there have experience with the fine for a missing amendment for this size plan?

Thanks!

[rcline46]

Most prototype plans did NOT require the amendment to be signed if no changes were made to the provided amendment and the amendment contained default provisions.

[Bird]

It's not clear from your post if the prototype amendment was to be signed by the plan sponsor (but wasn't or it can't be found) or if it was amended by the prototype sponsor and a copy was simply given to the plan sponsor (but can't be found).

If it was to be signed and wasn't, then you're stuck. I don't know much about the sanctions but what you quoted seems high.

If it was just a copy of something executed by the prototype sponsor, and they can't find a cover letter from the prototype sponsor telling them the plan was amended, then that's just silly; the agent needs to be educated by his or her supervisor.