Crediting Prior Service - Catchall Language

[Phlyers]

We have a sponsor and additional adopting employer who are acquiring the assets and employees of numerous companies, who want to credit prior service.  Is it permissible to have some sort of catchall language that credits prior service with all companies that will be purchased instead of amending the plan each time and listing out all individual companies?

The ERISA books didn't seem to address the situation and the FT William document sections says list each company.  Just asking because I think I've seen Relius documents in the past have such a catchall provision.

Thanks in advance. 

[CuseFan]

I have amended individually designed pension plans to do exactly that - but be careful what you wish for, because along comes a different acquisition where you don't want to do that and unless you amend to exclude before closing, it's too late, they're in. I don't know how this fits in pre-approved plans. If the sponsor knows they are acquiring all similar targets for which they want to credit service within a certain time period, I expect you could craft the provision to say all companies whose assets were acquired by the plan sponsor between xx/xx/xxxx and yy/yy/yyyy.

[Larry Starr]

11 hours ago, Phlyers said:

We have a sponsor and additional adopting employer who are acquiring the assets and employees of numerous companies, who want to credit prior service.  Is it permissible to have some sort of catchall language that credits prior service with all companies that will be purchased instead of amending the plan each time and listing out all individual companies?

The ERISA books didn't seem to address the situation and the FT William document sections says list each company.  Just asking because I think I've seen Relius documents in the past have such a catchall provision.

Thanks in advance. 

Maybe you can do it (but I think there may be some disclosure issues there - plan sponsors have to be listed by name in the SPD) but I just think it is a terrible idea.  I don't like anything that can result in unintended consequences, and that can easily happen when something is "automatic".

Larry.

[Doc Ument]

The Relius option is just that - an option.   To paraphrase Larry - FIS gives you enough rope to hang yourself (by selecting that option).   And any preapproved plan that does not have that option but that does have a blank "other" line could <presumably> be filled in with something to the effect that all acquired companies are "in" (I say "presumably" because you must observe any stated parameters for the "other" option).   Don't forget, however, that such language can lead employers and less experienced advisors astray - because such options (depending on how well they are drafted) can convey an unintended implication that there are no predecessor employers except those designated by such an option.  In fact, there may be some predecessor employers declared as such under the plan's boilerplate provisions, as required by law.   Those employers must be treated as predecessor employers even if no option is elected - but some employers, when they see that no option is selected, conclude that no company is a predecessor employer.   Such an option should ideally say "In addition to any acquired employer that must be treated as a predecessor employer under the terms of the document, the following additional employers shall also be treated as predecessor employers....[every acquired company, trade, or business, whether acquired by stock or asset, etc.]"

[Phlyers]

Thanks for all the replies.  I also contacted FT William who said they wouldn't recommend catchall language and have never seen any that works.  They continued prior service with non-affiliated employers need to be specified.  It seems all are on the same page on this one.

To make the situation murkier, the sponsor and additional adopter are both employers and management companies.  Some businesses they own the building but weren't managing the employees.  As of certain dates, they will be managing and paying the employees at these locations through their own EINs.  In terms of service, I know the document automatically credits service with companies from the point of being in a controlled group, credits services with additional adopting employers and leased employees.  Any suggestions to these situations of owning the buildings but later managing and paying the employees there in terms of their prior service with the old managers.

[Larry Starr]

21 hours ago, Phlyers said:

Thanks for all the replies.  I also contacted FT William who said they wouldn't recommend catchall language and have never seen any that works.  They continued prior service with non-affiliated employers need to be specified.  It seems all are on the same page on this one.

To make the situation murkier, the sponsor and additional adopter are both employers and management companies.  Some businesses they own the building but weren't managing the employees.  As of certain dates, they will be managing and paying the employees at these locations through their own EINs.  In terms of service, I know the document automatically credits service with companies from the point of being in a controlled group, credits services with additional adopting employers and leased employees.  Any suggestions to these situations of owning the buildings but later managing and paying the employees there in terms of their prior service with the old managers.

Yes, as those employees switch to the sponsor's payroll and become their employees, if you want to give credit for prior service, amend the plan to add the prior employer.  It's a simple one page amendment and SMM.