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Master and Prototype Plan Sponsors - Responsibilities and Tips

M&P plan sponsors must meet their responsibilities that include making diligent efforts to ensure that adopting employers:  

  1. complete and sign new adoption agreements and signature pages when necessary (for example, when the plan has been restated, or when the plan sponsor changes adoption agreement choices);

  2. are aware of and receive all plan documents and amendments (including an IRS-approved copy of the plan, subsequent amendments and the most recent opinion letter); and

  3. timely amend their plan for law changes to remain qualified.

Additionally, M&P sponsors have recordkeeping responsibilities and must give the IRS a list of their adopting employers upon request.

Tips for M&P Sponsors
The IRS Employee Plans Compliance Unit recently conducted a review of how well M&P sponsors communicate with their adopting employers about compliance issues. Based on our review, we developed these 10 tips for M&P sponsors to address the potential concerns that may arise as they attempt to meet their responsibilities to adopting employers.

Tip

Potential Concerns

  1. Encourage adopting employers to keep plan amendments and plan restatements
    (more)
  • Adopting employer is merging and needs documentation
  • Adopting employer wants to terminate the plan and needs documentation
  • Adopting employer needs plan documents for a due diligence review
  • Adopting employer needs plan documents to file for a Determination Letter 
  1. Track communications with adopting employers
    (more)
  • Adopting employer says they never received the interim or discretionary amendments
  • Amendments are in binder but not signed or dated
  • Plan operational practice does not match adoption agreement or trust
  1. Provide clear instructions to adopting employers
    (more)
  • An interim or discretionary amendment is not signed or dated
  • Adopting employer can’t locate plan documents when audited
  • Adopting employer doesn’t understand what to do
  1. Track the return of executed documents
    (more)
  • Adopting employer says they never received the interim or discretionary amendments
  • Adopting employer can’t locate their documents
  1. Encourage adopting employers to do an annual plan check-up
    (more)
  • Adopting employer may miss an opportunity to self-correct or voluntarily correct plan form and operational errors
  • Financially troubled adopting employer does not take action to:
    • amend the plan,
    • freeze the plan, or
    • stop minimum funding deficiencies, risking incurring excise taxes
  1. Ensure adopting employers only choose approved elective plan provisions and stay within approved parameters
    (more)
  • Adopting employer writes in choices that deviate from the pre-approved language in the adoption agreement
  • Adopting employer completes a fill-in provision with language that strays beyond the parameters of the pre-approved plan
  • Adopting employer crosses out plan or trust language and adds new language
  1. Keep your sponsorship records updated
    (more)
  • M&P Sponsor does not secure new opinion letters when changing EIN
  • M&P Sponsor does not verify if any adopting employers are using their M&P plan document before discontinuing or abandoning it
  • The IRS may request that M&P Sponsors provide a list of current and past adopting employers with identifying information
  1. Communicate with the adopting employers
    (more
  • If adopting employer misunderstands plan rules or doesn’t have contact with M&P sponsor:
    • annual Form 5500 series return may not get filed
    • allocations may not get made
    • interim and discretionary amendments may not be executed timely
    • funding deficiencies may occur
    • administrative procedures prior to distributions may not be followed 
  1. Use IRS Resources
    (more)
  • M&P Sponsor is unfamiliar with changes to retirement plan laws
  • M&P Sponsor fails to take advantage of available resources
  1. Use the Employee Plans Compliance Resolution System to avoid and correct plan errors
    (more)
Page Last Reviewed or Updated: 13-Mar-2014