How to correct for Affiliated Employers Failure to adopt 401(k) plan of Parent Company?

[Guest benefitsnewbie]

Hi, i'm trying to determine whether this is an operational or form defect, and whether proper correction should be made through EPCRS or VCP?

Facts:

A subsidiary of Company who participates in the Company's 401(k) plan did not adopt the plan. The plan adoption agreement and document requires an employer other than the sponsor (i.e. a subsidiary) to adopt the plan.

Thoughts?

Thank you!

[ETA Consulting LLC]

Hi, i'm trying to determine whether this is an operational or form defect, and whether proper correction should be made through EPCRS or VCP?

Facts:

A subsidiary of Company who participates in the Company's 401(k) plan did not adopt the plan. The plan adoption agreement and document requires an employer other than the sponsor (i.e. a subsidiary) to adopt the plan.

Thoughts?

Thank you!

The correction method is simple, adopt the plan retroactively to the time the affiliated company started to participate. I'd just submit it through VCP and be done with it. Technically, VCP is a part of EPCRS; and should apply when there is no approved self-correction (SCP) method to fix. In this instance, there doesn't appear to be a approved alternative under SCP.

Good Luck!

[Guest benefitsnewbie]

Thank you! That was exactly the info I was looking for...very helpful!

[Guest Willy]

Does anyone think that a subsidiary can make a valid ORAL election to participate in parent corporation's 401(k) plan? Or, is there a problem if there is no written participation agreement? Thanks!

[austin3515]

Any basis for treating as a discretionary amendment, giving until the last day of the Plan YEar for execution?

[My 2 cents]

Any basis for treating as a discretionary amendment, giving until the last day of the Plan YEar for execution?

Would action by an affiliated employer to participate in a plan be considered an amendment?

[austin3515]

Bingo, that's the question. Especially when it is a wholly owned sub.