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pre-approved 401k plan with multiple missed restatements - how to correct?


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Posted

Employer started 401k plan in 2001 and signed an amendment freezing contributions to the plan in 2008.  Since then all assets have been distributed except for 1 participant and the employer has continued to file Form 5500-SFs.  Employer going through a merger and needs to terminate the plan.  Employer cannot locate the original plan document or any amendments or restatements.  The only document we have is the amendment freezing the plan.  We know the plan must be updated prior to termination, but can we just adopt a Cycle 3 restatement and the requirement amendments since then or do we have to go back to 2008 forward and adopt required interim amendments?  Doesn't the Cycle 3 restatement capture those requirement amendments? Trying to figure out the most cost-effective but compliant method to fix this.  

Posted

Beyond your inquiry into what might be enough so a plan’s governing documents are treated as tax-qualified in form:

If the business transaction is a merger of the employer organization into another business organization, rather than a buyer’s purchase of a seller’s assets:

The employer should want its lawyers’ advice about what corrections would make truthful the employer’s representations, warranties, covenants, and other promises stated by the merger agreement.

That might require something more than what makes the plan tax-qualified in form.

This is not advice to anyone.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

Posted

The compliant correction, if I recall, is to adopt all the missing pieces to bring the plan up to date and do a VCP filing. Whether the parties agree to simply do a current update and sweep prior issues under the rug is up to the attorneys. What about the recordkeeper(s) and/or TPA(s) that have serviced the plan, have they been contacted for copies of plan documents?

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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