signed 401(k) doc but not implemented

[justanotheradmin]

What is the correction when a sponsor signs a 401(k) plan document (after the stated effective date in the document), but then never sets up accounts or arranges deferrals?

Is it simply the missed opportunity to defer under EPCRS?

What if the plan also happens to be a SH (3%) plan?

[jpod]

You could always assume that the plan was disqualified (with no consequences because no money ever went into it), and start a new plan.

[12AX7]

You could always assume that the plan was disqualified (with no consequences because no money ever went into it), and start a new plan.

Was the plan communicated to eligible employees via SPD or enrollment forms? Is a do-over possible for a SHNEC under these circumstances?

[g bennycon]

I believe there are 3 issues that need to be investigated:

1. As previously stated has the plan been communicated to the employees?

2. Has the Safe Harbor Notice been provided for the first plan year?

3. Has the plan ever filed a 5500 Form?

The filing of the 5500 Form is the most critical item because it places the plan on the IRS and EBSA systems. If the plan has never filed a 5500 and not been communicated to NHCE employee participants, then it could be interpreted as a error. The IRS and EBSA would have no idea what happened unless an employee contacted them. If a 5500 has been filed then the correction would involve the EPCRS procedures.