delay in implementing an amendment

[K2retire]

Client asked for an amendment adding Roth. HR person specifically asked when it should be effective and was told immediately. After the amendment was written (effective June 30) and signed on June 25, their only programmer announced that due to other priorities, it may be several months before he is able to make the necessary changes to the payroll system.

Any suggestion about what might be a reasonable administrative delay for implementing such an amendment?

[12AX7]

I'm not sure how to answer the question about reasonable administrative delay, but is it possible to re-do the amendment or rescind the amendment until such time that programmer has the ability to implement Roth?

[BG5150]

This is something I never understood:

The SMM (in this case) would not have to be delivered until July 31 2014.

So, in theory, it could be over a year before someone could find out about something like this?

How does that work? Should the ER have to tell people about this right away? And if they do (via payroll stuffer postcard, say), why the need for an SMM?

[12AX7]

BG, those rules go back to ERISA, I believe. Having been in the business almost as long, we rarely made amendments to plans at that time, and usually those amendments did not affect participant elections within a plan.

These old rules do not correlate to today's participant plan involvement and therefore best practice would require interim communications until such time the SMM is produced or a revised SPD is distributed (sooner the better).

[rcline46]

A company should never be held hostage by its programmer. Apparently they process their payroll in-house. Hire a contract programmer. Who assignes the priorities to the programmer? This is obviously a failure by management.

[GMK]

Maybe the company should have checked with the programmer before making promises that it didn't have enough staff to meet. Either that or have the programmer drop the other projects (they can't be that important) and make the payroll changes the programmer's top priority.

People who sponsor and run plans really need to check in advance on the nuts and bolts required to implement changes, instead of blindly making changes that they think will magically happen.

[12AX7]

A company should never be held hostage by its programmer. Apparently they process their payroll in-house. Hire a contract programmer. Who assignes the priorities to the programmer? This is obviously a failure by management.

In my world, the 401 (k) plan doesn't drive this type of business decision for the client and I would be hesitant to making these suggestions to a client; however you are likely correct.

[K2retire]

Maybe the company should have checked with the programmer before making promises that it didn't have enough staff to meet. Either that or have the programmer drop the other projects (they can't be that important) and make the payroll changes the programmer's top priority.

People who sponsor and run plans really need to check in advance on the nuts and bolts required to implement changes, instead of blindly making changes that they think will magically happen.

The HR person is furious because she specifically asked about this before the amendment was drafted. Management will have to decide the priorities, and clearly they think it is a case of waiving the old magic wand. Since the other project involves something needed for whatever it is that they manufacture, I can understand the plan being a lower priority for the company.

[BG5150]

For a small fee, I'm sure, the amendment can be rescinded or changed to reflect a later date.

[QDROphile]

Next time (including the amendment suggested by BG5150) adopt terms that allow the plan aministrator to determine the effective date based on administrative practicality.