Good faith amendment for Fidelity preapproved adopter that is terminating its plan

I have a situation where client wants to terminate its 401(k) before a stock sale. Client uses a Fidelity preapproved document and has already adopted its restatement but is being told by its Fidelity rep that it needs to come up with its own good faith amendment for SECURE Act and CARES Act because Fidelity does not have yet and will roll those out only later this year. I have a form of good faith amendment that I can use for this client, but I am a little incredulous that Fidelity does not have its own by now. Can anyone confirm or deny what the client’s Fidelity rep is saying? This must have affected a lot of terminating plans over the last couple of years.

I have no experience that would help answer your question.

But your description of what a Fidelity rep said seems consistent with what Fidelity’s website (at least a subpage for small-business retirement plans) says:

https://www.fidelity.com/retirement-ira/small-business/termination-guide

“Am I going to receive additional amendments for the CARES and SECURE Acts?

Any applicable amendments related to the CARES and SECURE Acts will be included in the next plan restatement cycle in approximately 6 years. In the interim you will receive good faith amendments for the preapproved plans for both pieces of legislation. These amendments will be distributed in accordance with the applicable amendment schedule.”

And Fidelity’s “Summary of Changes” to accompany its plan and trust documents states:

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/retirement/dcrp-summary-of-changes.pdf

“Good-Faith Amendments: Legislative and regulatory changes since calendar year 2017 that impact your Defined Contribution Retirement Plan will be adopted as part of the next six-year restatement cycle. In the interim you may receive or be asked to complete good-faith amendments for your plan. You will be receiving certain good-faith amendments for both the SECURE and CARES Act.”

One imagines Fidelity’s service agreement doesn’t obligate Fidelity to anything.

Even if a retirement-services provider had its interim or good-faith amendment at the ready, such a text would have no IRS opinion letter and no assurance from the provider.

Thanks, Peter. I think that's right. For ongoing plans, it's not really a problem. But if you have a client that, e.g., is undergoing a stock sale and the acquirer wants the plan terminated before close, the plan needs its own, individually designed good faith amendment for SECURE and CARES Acts. 

Yes, I understand the problem. It’s a result of employers expecting to get all plan documents from nonlawyer service providers. And of a documents regime not built for promptness.

If you can produce your SECURE/CARES amendment for a fee your client doesn’t choke on, that’s likely ten times more efficient than asking the recordkeeper.

It's pretty common for large plan providers not to have interim amendments or termination amendments ready to go at any time a client decides to terminate a plan. We've done a number of good faith termination amendments for other providers' pre-approved plans to bring them into compliance with current law before they terminate and we've had clients execute those amendments after the termination date as well. In fact I can't recall a time when such an amendment was available from the provider. Because we're a law firm that has its own pre-approved plans as well, we generally have some type of termination amendment template that we continue to update as guidance comes out and that we can individualize for another provider's plan. I realize it becomes more difficult when you're not the provider drafting the plans and it can be time-consuming to review the RA lists and draft language for an amendment. 

As Peter points out, the amendment won't have reliance regardless of who prepares it. And I'm guessing that's why the risk-averse large providers don't provide one.

FTWilliam is the provider I know that promptly produces amendments and makes them available to plans/ customers.

6 hours ago, Peter Gulia said:

If you can produce your SECURE/CARES amendment for a fee your client doesn’t choke on, that’s likely ten times more efficient than asking the recordkeeper

That is the reality, Peter.

3 hours ago, EBP said:

As Peter points out, the amendment won't have reliance regardless of who prepares it. And I'm guessing that's why the risk-averse large providers don't provide one.

That was my guess as well, in the end, EBP. One thing I would point out is that my recollection is that before the SECURE Act the IRS was perhaps better at publishing its own good faith amendments.

2 hours ago, Patricia Neal Jensen said:

FTWilliam is the provider I know that promptly produces amendments and makes them available to plans/ customers.

That is my experience as well, Patricia.

As does Relius

4 hours ago, IDR said:

As does Relius

Good to know, IDR. Thanks.