Fixing Related Employer Issue

A client added his brother's company to their plan in 2016. The recordkeeper forwarded a participation agreement, the client signed in error, and the plan was set up as a related participating employer. Since its not part of a controlled group with the other entities, can this be self-corrected by retroactively amending the plan to be a multiple employer plan?

1 hour ago, khn said:

A client added his brother's company to their plan in 2016. The recordkeeper forwarded a participation agreement, the client signed in error, and the plan was set up as a related participating employer. Since its not part of a controlled group with the other entities, can this be self-corrected by retroactively amending the plan to be a multiple employer plan?

When we have such issues, we generally do a VCP to obtain relief to do a retroactive participation agreement and related changes to the plan (our documents makes it a multiple employer plan whenever a non-controlled group member participating employer signs on).  We *never* retroactively amend to correct without the VCP filing....

EPCRS (Rev. Proc. 2016-51) lays down the law in Section 4.01(1) that self-correction is not available for plan document failures, which is what this is. So you must do a VCP submission.