retroactive participating agreement effective date

[Jerry Erisa]

Took over a new client in late Dec 2014.

Was informed in the first half of 2015, that there was a participating ER.

Can the participating ER sign the Participation agreement in the first half of 2015, retroactive to the first day of the plan's initial year, i.e. 1/1/2014?

Lets assume the client wants/needs the participation of the EES in the participating ER.

Thanks in advance for any suggestions!

[Lou S.]

I could be wrong on this but I think what you have is a document failure easily correctable under VCP.

[QDROphile]

Adding an affilaite is probably involves a plan amendment. This would be a retroactive plan amendment that should have no trouble in VCP unless there are some strange circumstances, such as an extraordinary number of HCEs in the affiliate.

[Briandfox]

This may depend on the core Plan document in use.

I believe that the Sungard documents can be set up so that entities that share a control or affiliate service group relationship with the plan employer are automatically in the plan absent additional adoption paperwork (the idea is that they are treated as a single employer anyway for may purposes).

So the first thing I would do is check to see how the plan document defines Participating Employer, if this is a prototype I would look to the Basic Plan document to see what the document prescribes as the procedure for participating employers.

If they don't automatically come in, then they typically need an adoption resolution and a participation agreement with the primary employer, whereby the primary employer consents to the participating employer's adoption of the Plan.

Since that didn't happen, it is as if they never adopted a written Plan document in 2014.

For issues like this I have typically done a VCP, which is easy, but I don't treat it as a retroactive amendment to the Plan because there is nothing to amend in the Plan document (the written Plan document doesn't really change). I like to proceed with the position that the Participating Employer had adopted the Plan on a de-facto basis with the consent of the Primary Employer and Plan sponsor but never formalized it's adoption of the Plan as of it's initial effective date of Participation with the required paper work specified in the Plan document.

[QDROphile]

You might not call that a plan amendment, but it is. The participation agreement is a plan document. The "core" plan document has to say how an affiliated employer can particpate. If it says participation is by participation agreement, then the participation agreement is expressly a plan document. If the plan says nothing about a participation agreement, then the particpation agreement is ineffective to provide for participation unless you treat the participation agreement as a plan amendment.

[Briandfox]

Interesting.

When you file a Form 5300 or 5307 application would you list and include participation agreements as amendments?

What about a plan loan program referenced by the Plan document?

I do agree with you that if the plan says nothing about participating employers or participation agreements that the Plan would have to be amended for such purposes.