Timing of Amendment's Adoption and Effective Dates

[mming]

A profit sharing plan covering both HCEs and NHCEs is being restated for GUST. The Corporate Resolution and the signature page of the new document were signed December 28, 2000. The effective date of the restatement was set as January 1, 2001 because the employer wanted to add a 401(K) feature for the whole of 2001. Are there regulations mandating that a certain amount of time elapse between the adoption of an amendment and its effective date in such a circumstance, i.e., will the timing of the above execution allow the new document to be valid as of 1/1/2001?

[Guest Mr. X]

In restating the document effective 1/1/01, do the provisions that changed due to GUST have separate effective dates (i.e. the changes to the highly compensated employee definition, etc.)? I was under the impression the effective date of the restatements had to be the first plan year beginning in 1997. Certain sections, like the addition of a 401(k) feature, could have a different effective date.

As to your question, I do not see a problem with the timing of the amendment. That issue would only arise if due to the timing, the amendment discriminated in favor of certain groups or individuals.

[mming]

Thank you for your reply, Mr. X. You're correct that certain GUST provisions could/should be made effective up to several years ago. In the mentioned case, a Corbel volume submitter doc was used and the HCE definition specifies that the GUST definition applies for PYs after 1996. Also, the doc allows you to indicate whether the GUST rules pertaining to items such as automatic cash-outs and the elimination of family aggregation are effective as early as possible, currently, or some time inbetween.

The flexibility of the doc used will dictate when to enact the GUST provisions that allow you a choice. As for the provisions where no choice of effective date is allowed, I believe using the GUST provisions in the operation of the plan from their mandated effective date, even though the actual doc may not have the matching language until maybe a few years afterward, is OK. That is, as long as the doc is restated for all of GUST during the remedial amendment period. I suppose a well drafted doc would show the effective dates for all the GUST provisions, whether chosen by the sponsor or mandated by the gov't.