Resolution versus amendment anticutback

1. If a plan sponsor wants to undo a plan termination, is the 100% vesting that was stated in the resolution to terminate also reversible?
2. The resolution is not a plan amendment and hence the plan document has not been modified. I am thinking that if the termination resolution stated that all benefits were vested as of the termination date and subsequently a resolution is executed to nullify the plan termination the 100% vesting could be reversed as well.  The plan vesting schedule was never amended. I would think certainly benefits accrued after the termination date could be subject to the vesting schedule going forward. Any thoughts on this?

It depends on what the resolution and the plan say. Depending on what the plan requires, a resolution can effect changes, e.g., serve as the amendment itself. Or a resolution might authorize an agent to take action, such as adoption of an amendment, in accordance with the terms of the resolution. The entire context is relevant and corporate, agency, and contract law are implicated.

At least for an ERISA-governed employee-benefit plan, a plan’s governing documents might state provisions about what’s recognized or precluded as a plan amendment. Following those provisions, many kinds of writings might amend (or amend again) an employee-benefit plan.

To show differing ends of a spectrum, imagine “the” plan document states this:

“The Plan Sponsor may amend the Plan by any writing that is under relevant law an act of the Plan Sponsor.”

Under a Supreme Court precedent, that’s enough to state an ERISA § 402(b)(3) plan-amendment procedure. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 18 Empl. Benefits Cas. (BL) 2841 (Mar. 6, 1995) (by O’Connor, J. for a unanimous Court) (Stating as little as “[t]he Company” may amend the plan is enough to meet ERISA § 402(b)(3)’s two requirements—that a plan “provide a procedure for amending [the] plan, and [a procedure] for identifying the persons who have authority to amend the plan[.]”), available at https://tile.loc.gov/storage-services/service/ll/usrep/usrep514/usrep514073/usrep514073.pdf.

Or imagine a custom-drafted plan states this:

“Only the Plan Sponsor can amend the Plan, and can do so only by a writing that (i) includes a caption that describes the writing as an amendment of this Plan; (ii) is signed by the Plan Sponsor’s duly appointed and then currently serving president; and (iii) states on that writing, not as an attachment, that signer’s acknowledgment of that writing in the physical presence of a Notary Public.”

Many plans, perhaps especially those stated using a recordkeeper’s or third-party administrator’s IRS-preapproved document, likely are somewhat closer to the first illustration.

As QDROphile suggests, an answer might turn on reading a whole series of writings that might state or amend the plan.

And as QDROphile reminds us, the law of corporations (or other business organizations), agency, and contracts all could be relevant to discern what is or isn’t a plan amendment.

(The underscoring is not mine.)

In my opinion, you can't reverse/undo a plan term.  You created a right to 100% vesting and a distributable event.  

What you can do is start another plan.  This solves the distributable event issue because there is an alternative DC plan to transfer assets to, and you add new sources for new contributions that will be subject to vesting.

I've never seen a truly bullet-proof answer to this question. In my prior life, we had a couple of plan terminations rescinded, where no distributions had taken place. This was done on the advice of ERISA counsel, and 100% vesting was retained, but counsel opined that there wasn't an anti-cutback violation re the distributions. (This was a very long time ago, and some of the details have undoubtedly escaped my memory.) 

I also wonder - if a 401(k) termination is rescinded, then does the employer have a liability for missed deferrals/match? I'd almost think so.

RBG has an interesting idea.

2 hours ago, RatherBeGolfing said:

In my opinion, you can't reverse/undo a plan term.  You created a right to 100% vesting and a distributable event.  

What you can do is start another plan.  This solves the distributable event issue because there is an alternative DC plan to transfer assets to, and you add new sources for new contributions that will be subject to vesting.

 

Unless you have a successor plan issue. 

Thanks for the comments. My preference is to not rescind the termination due to potential legalities and me not wanting to practice law as a non attorney. However, they will have to wait 12 months I believe to put in a replacement plan. This causes some difficulty with a delay in doing a 4980 transfer from the terminated defined befit plan. While the 100% vesting could remain, as RBG points out, the opportunity to distribute say safe harbor contributions on other than a hardship distribution is lost and this could not be brought back if the plan were ongoing. I had anticipated  QNECs to cover the lost deferral opportunity and the missed safe harbor contributions retroactive to the date of plan termination.