Plan termination (DC - 401(k) plan

[Belgarath]

So, employer does binding resolution to terminate plan as of (x) date, no new contributions, etc., etc. Notification to employees is sent, specifying that date as the effective date of the plan termination. However, PLAN was not amended to terminate by that (x) date.

Arguably, the resolution can suffice, at least temporarily, to legitimately establish plan termination date, and plan can subsequently be formally amended to terminate, update for SECURE, etc.? Or is that a hard no? We always do plan amendment by the day before the formal termination date, but I believe that facts and circumstances can allow otherwise if the resolution, notification to employees, etc., are sufficiently detailed.

Thanks.

[Peter Gulia]

Among frames one might use to think about your question, here’s one of them:

Who needs to be persuaded that the documents are good-enough?

Is it the IRS, because the plan sponsor will apply for the IRS’s written determination?

Is it an accounting firm, because an independent qualified public accountant audits the plan’s financial statements?

Is it Belgarath, because the TPA wants to protect itself from a liability exposure or a reputation risk?

Or is it only the employer, in its roles as the plan’s sponsor and administrator?

Thinking through those questions might help one think about what’s good-enough.

Also, consider the exact text of the employer’s resolution.

[Belgarath]

22 minutes ago, Peter Gulia said:

Is it an accounting firm, because an independent qualified public accountant audits the plan’s financial statements?

I

Hi Peter - this one. The employer is, to be kind, useless, and has been in complete disarray for months. We shoulda dumped them a long time ago, but the bosses don't like to cancel clients...

We don't know yet if the accounting firm will have an issue with this - just preparing for that possibility.

Gracias.

[Peter Gulia]

If a law firm was on the scene when the weak documenting happened, the law firm might be persuaded to write a memo the CPA firm relies on as a file-closer.

Otherwise, the employer/administrator might be at the mercy of what the CPA firm observes and, if it observes, thinks.

[david rigby]

Seems like pretty good comments (not legal advice 😄)  from @Peter Gulia.  Another course of action might be to ask the accounting firm directly.

At the risk of sounding like a broken record (you youngsters can look up what that means), in addition to reading the statute, you may find some useful information by searching these Message Boards for prior discussions.  I suggest a search term of "4980" or "replacement".