Amendment adding Roth provision

[Doghouse]

This question concerns the timing of a Roth amendment. We are financial advisor for a plan that uses a TPA. A recent restatement of the plan adds the provision to defer on a Roth basis. The restatement has not yet been adopted, but the TPA is telling the sponsor that participants can defer on a Roth basis now because the effective date of the restatement is 1/1/19. Somehow it doesn't seem quite right that they are able to do this before the amendment is executed. Sanity check?

[ratherbereading]

I believe they can as a voluntary plan amendment has to be signed on the last day of the plan year in which the change takes effect, so they have to sign by 12/31/2019.  

[EPCRSGuru]

Agree with ratherbereading, but also, are there any corporate actions (such as something in Board or Trustee meeting minutes) evidencing their intentions?  How has it been communicated the participants?  Has the payroll system been updated to accept the contributions?  If implementation steps have been taken I believe it is OK.

[Doghouse]

It's definitely reflected in Plan Committee meeting minutes.

[Doc Ument]

Agreed, the issue that Doghouse is worried about is that an employer cannot implement initial pretax elective deferrals until the document is adopted. Once you have pretax deferrals implemented, then you can add Roth retroactively (to an earlier point in that plan year) as a discretionary amendment (but not to a time before the plan timely implemented pretax deferrals, because Roth can only exist as a feature if pretax exists as a feature). If, though, the plan is an ADP safe harbor plan, I would hesitate to add Roth retroactively without considering what IRS Notice 2016-16 might require by way of a "timely" revision to the safe harbor notice, i.e., maybe you can't do so retroactively.