Plan Termination and the SECURE Act

[msmith]

I have a non-Safe Harbor 401(k) Plan that will be terminating by 04/01/2020. According to the ERISApedia webcast, an Amendment is required for terminating plans ("presumably" - their word). 

I have not seen any Amendment language for this. Anyone else?

[Larry Starr]

34 minutes ago, msmith said:

I have a non-Safe Harbor 401(k) Plan that will be terminating by 04/01/2020. According to the ERISApedia webcast, an Amendment is required for terminating plans ("presumably" - their word). 

I have not seen any Amendment language for this. Anyone else?

 

Not enough info; WHY did they say an amendment is needed?  For what purpose?  And if you didn't get that info in the webcast, then I think you need to ask THEM first and then post on this board what they said and then we can comment as to whether we agree or not.  Having said that, you ALWAYS need an amendment to terminate a plan, even if it is just to TERMINATE the plan!

[msmith]

Hi Larry - I believe you have referenced the ERISApedia Webcast that Darrin and Ilene hosted. The comment they made regarding terminating plans is on Slide 7. Also, FIS/Relius has posted a message on their Document website about a required amendment.

[RatherBeGolfing]

3 hours ago, Larry Starr said:

Not enough info; WHY did they say an amendment is needed?

Derrin was talking about the deadline to amend plans for changes made by SECURE being the last day of the plan year beginning on or after 1/1/22, but if you terminate the plan before that, the deadline to adopt any required amendments would be the termination date.

[Peter Gulia]

Beyond changes to § 401(a)(9)-required distributions (which might be obviated by a typical plan termination’s single-sum final distribution), is there anything in the appropriations act that requires a plan amendment?

[RatherBeGolfing]

2 minutes ago, Peter Gulia said:

Beyond changes to § 401(a)(9)-required distributions (which might be obviated by a typical plan termination’s single-sum final distribution), is there anything in the appropriations act that requires a plan amendment?

I'm not 100% sure.  Safe harbor changes in Section 103 maybe? 

I know FT Williams will be coming out with a "termination amendment" fairly soon (a few months), and it sounds like FIS is doing the same.

[Linda Wilkins]

Whenever a plan terminates,  it must be amended pre-termination to reflect all required amendments due to statutory or regulatory changes, as well as amended to reflect its termination.  This puts the plan drafter in a bit of a bind because there may be no "required amendments" list and no sample plan document language provided by the IRS (yet), so you would consult with counsel to determine what amendments are needed. It would be helpful if prototype sponsors could provide an amendment for the SECURE Act (and hardship withdrawal changes if implemented) for plans terminating this year.  Good luck!

[Peter Gulia]

Am I right in assuming that a sample plan-termination amendment from a document provider gets no IRS letter, and so brings no IRS comfort?

(Please understand that my question is not a criticism of document providers; in my experience, they provide useful services, including on many points that are beyond an IRS assurance.)

[Mike Preston]

On its own, no letter. But submitting a 5310 on plan termination is still ok.

[RatherBeGolfing]

Even without submitting for a det letter on termination, I dont see the IRS going after a plan with a good faith amendment to include provisions of SECURE that had no actual impact on the plan or the benefits paid.  

Of course I probably just jinxed everyone here...

[Belgarath]

Just getting opinions here - what is your feeling on restating a plan with new, IRS pre-approved document, when the plan termination date is PRIOR to 6/30/2020? Yes, you need Bipartisan Budget Act Amendment, SECURE Amendment, and possibly CARES Amendment, but are you going to retroactively restate these plans?

Oops, typo in the date above - now corrected. 6/30 is the date of the IRS approval letter for the docs.