Is an amendment necessary for plan sponsor name change

[cpc0506]

Client tells us that they have changed the name of their legal entity. Is an amendment necessary for the existing plan to change the plan sponsor name? If so, when does the amendment need to be done?

[david rigby]

Most plan documents include (often in the definition section) a statement that defines the plan name. If so, changing the sponsor name will not automatically change the plan name.

[cpc0506]

I understand that changing the sponsor name will not automatically change the plan name.

My question is: if the plan sponsor name changes, is an amendment necessary to reflect the new plan sponsor name?

[My 2 cents]

Most of the plans we work with include a definition of Employer that begins "'Employer' shall mean [company name] and any successor that shall maintain this plan;". Wouldn't that be sufficient when the only change is a change in the name of the sponsor?

Certainly, if it is desired to change the name of the plan, an amendment to the plan would be required. Updating the plan just for a change in the name of the sponsor could probably wait until the next time a plan amendment is really needed, but there would be nothing to prevent the preparation and adoption of an amendment to just change the sponsor name. Even without such an amendment, the change in sponsor name (and, if applicable, EIN) should be documented on the Form 5500.

[BG5150]

The company's name is in the SPD in a couple places. So, the SPD is changing. Why not do an amendment and SMM?

[jpod]

The answer is "no."

[My 2 cents]

Is the change of the sponsor's name a "material modification"?

[jpod]

It would be prudent to treat a mere change in the employer's name as something requiring the issuance of a SMM, but the original question was whether it would require a Plan amendment, which it would not.

[Bird]

Like so many things, this depends on the plan document. I looked at my documents, and they define Employer thusly:

"Employer" means the Company or any other employer required to be aggregated with the Company under Code sections 414(b), ©, (m) or (o); provided, however, that "Employer" shall not include any entity or unincorporated trade or business prior to the date on which such entity, trade or business satisfies the affiliation or control tests described above. In identifying "Employer" for purposes of Section 5.05, the definition in Code sections 414(b) and © shall be modified as provided in Code section 415(h).

But, significantly, Plan Sponsor is defined like this:

"Plan Sponsor" means the entity described in the Adoption Agreement.

So, we do amendments to change the plan sponsor. (And to be honest I think it's required more often than prior comments would indicate...I looked at an older document from another provider that we used to use and it says "SPONSOR: The term Sponsor means XYZ, Inc. (and any successor thereto that elects to assume sponsorship of this Plan)." (My emphasis - not any successor, but any successor...that elects...). I'm not sure that "successor" is defined or otherwise clear...suppose you go from one person owning 100% to 99% with 1% to another; is that a successor that automatically sponsors the plan?

As to the name of the plan, which wasn't part of the original question, I agree that you don't have to change it (and maybe/probably don't want to). If a business incorporates, I'm happy to leave the plan name as "ABC Plan" (as opposed to "ABC, Inc. Plan") so I don't have to tell the investment company and the IRS teletin unit about it, as you are supposed to.

[jpod]

The "entity so described in the Adoption Agreement," or an entity similarly described, is not changing just because it's name is changing. A more fitting question might be do you have to amend when the name stays the same but the entity attached to that name changes!

[Bird]

Good point. I may have been reading into the post that the entity itself changed.