terminating a plan w/out formal correction application

Plan sponsor has finally agreed to correct a plan by depositing long overdue safe harbor contributions (w/earnings).

They would like to terminate the plan, but they do not want to do the following:

• Submit a formal VCP correction
• Restate their plan document

I cannot stress enough, getting this deposit made is a tremendous achievement that we celebrated with jellybeans in the office.

I know we are not the only ones with awful clients. I also know the standard recommendation is to 'fire the client', but that frustrates me because that doesn't really solve the problems. 

That being said, I'm just looking for thoughts on helping them terminate the plan under those conditions, aside from incredibly caveated letter at what their risks are going to be.

You need to make sure the problem remains the client's and does not become yours. If I were in your situation, I would explain that there are lots of penalties associated with not doing the things you recommend and you're not an attorney (I'm assuming). If they want to terminate without doing what you recommend, they need legal counsel and you'll follow counsel's advice.

I agree wholeheartedly with you Bill, and while we have recommended seeking an attorney's advice on multiple issues, and we are continuing to do so, this Plan Sponsor simply won't spend the money.

And your firm might want your lawyer’s advice about when and how to end your services while managing risks of your exposures to, if not liabilities, at least defense and other expenses.

11 hours ago, TPApril said:

I agree wholeheartedly with you Bill, and while we have recommended seeking an attorney's advice on multiple issues, and we are continuing to do so, this Plan Sponsor simply won't spend the money.

At some point, you have to walk away. Again, please don't make their problem, your problem.

I agree with Bill and Peter wholeheartedly- I would also recommend documenting the heck out of your recommendations to them if it should escalate in the wrong direction ( before you prudently exit the stage).

Has anyone ever had a client literally sign off that they will not hold your firm responsible for their plan errors/issues/etc.?

On 6/13/2022 at 5:21 PM, TPApril said:

Has anyone ever had a client literally sign off that they will not hold your firm responsible for their plan errors/issues/etc.?

Absolutely, there is an indemnification clause in all our service agreements.