Takeover plans & plan documents

[chuTzPA]

when taking over a plan with a volume submitter or prototype plan document, say that plan doc is up to date and there is no particular amendment or restatement necessary, at what point do you restate the plan under the following two scenarios:

1. prior tpa had their own determination letter

2. they used a provider document (ie datair, ftwilliam) with an Opinion Letter, but the new tpa uses a different plan document provider

Immediately upon takeover, or at such time as some kind of amendment (required or optional) is necessary?

Understood there are a variety of plan document provider scenarios.

[K2]

If the plan was a prototype style document with an adoption agreement, I'd be willing to do basic amendments to the plan without restating, assuming it's just a question of changing which box is checked.  The preferred practical answer is to restate as soon as possible, though, since it's easier on staff to use "our" document.  That said, I'm unwilling to restate for free and uncomfortable charging for a restatement just for my own benefit.  

 

[chuTzPA]

Thanks kcbirm, our approach has been to minimize the hassle and costs of changing tpa, as long as they understand there may be a cost to restate if necessary, prior to the next restatement period.

Alternate scenario - what if the prototype plan is coming from a bundled arrangement in which they used their own approved prototype doc, and the prior recordkeeper is asking to have the doc restated?

[K2]

So the bundled provider is asking that you move to your document?  Now you have an excuse, er, a reason to charge for the restatement.  "We would have been happy to use your current document, but provider X has asked us to restate.  Rather than risk a compliance issue down the road, we recommend that the plan be restated now at a cost of X, which represents an XX% discount from our usual fee".  Should you be so inclined to discount.

 

Kevin

[ESOP Guy]

It has been a almost 5 years since I was working 401(k)s and ESOPs.  Since ESOPs can't be on a prototype it has been 5 years since I worked on prototypes.

One thing I would check is if the prototype is linked to the provider in some legal way.  I seem to recall seeing some from brokerage houses that had language that said if you leave that firm you would no longer rely on their letters and base document.  That caused the firm I worked for to almost always move them to one of our document.  I want to say we did offer a discount as this was part of our sales/conversion pitch.

[MoJo]

I'd restate immediately (even for free - as we do) because: 1) it's easier to use our document; 2) the plan sponsor probably no longer has reliance on the old provider's opinion letter; 3) the plan sponsor may be in breach of contract (pretty much everyone I worked for had a provision in their contract that said you could only use the document (which was copyrighted) only as long as you were a client); and 4) "maintenance" amendments would no longer apply and the plan could potentially get out of compliance.

[John Feldt ERPA CPC QPA]

Many times the plan administration system is linked through some database connection to the provisions in plan document. In order to keep things efficient (to keep administrative costs down), it seems reasonable to restate to the new provider's document if that is the case.

[Bri]

Isn't there THEN usually something where the TPA or custodian being abandoned states that they will no longer sponsor your prototype, thus making it (as of the date of termination of service) into an IDP? 
 

So the plan sponsor needs an 8905 right away....so they're not on IDP restatement rules.  (Haven't thought about it in the context of the no-more-5-year-cycles)