Master and Prototype Plan Sponsors - Responsibilities and Tips |
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M&P plan sponsors must meet their responsibilities that include making diligent efforts to ensure that adopting employers:
- 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);
- 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
- 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.
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Tip
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Potential Concerns
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- Encourage adopting employers to keep plan amendments and plan restatements
(more)
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- 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
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- Track communications with adopting employers
(more)
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- 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
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- Provide clear instructions to adopting employers
(more)
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- 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
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- Track the return of executed documents
(more)
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- Adopting employer says they never received the interim or discretionary amendments
- Adopting employer can’t locate their documents
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- Encourage adopting employers to do an annual plan check-up
(more)
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- 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
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- Ensure adopting employers only choose approved elective plan provisions and stay within approved parameters
(more)
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- 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
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- Keep your sponsorship records updated
(more)
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- 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
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- Communicate with the adopting employers
(more)
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- 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
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- Use IRS Resources
(more)
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- M&P Sponsor is unfamiliar with changes to retirement plan laws
- M&P Sponsor fails to take advantage of available resources
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- Use the Employee Plans Compliance Resolution System to avoid and correct plan errors
(more)
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Page Last Reviewed or Updated: August 23, 2011
