Common use of Employer Reliance Using A Standardized Adoption Agreement Clause in Contracts

Employer Reliance Using A Standardized Adoption Agreement. An Employer establishing a Plan under a Standardized Adoption Agreement in conjunction with this Prototype Plan may rely on that Plan’s opinion letter, except as provided in (1) through (3) and paragraph (c) below if the Sponsor of such Plan or Plans has a currently valid favorable opinion letter, the Employer has followed the terms of the Plan(s), and the coverage and contributions or benefits under the Plan(s) are not more favorable for Highly Compensated Employees than for other Employees. (1) An Employer may not rely on an opinion letter for a Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416, without obtaining a determination letter, if the Employer maintains at any time, or has maintained at any time, another plan including a Plan established under a Standardized Adoption Agreement that was qualified or determined to be qualified covering some of the same Participants. For this purpose, a plan that has been properly replaced by the adoption of a Plan established under a Standardized Adoption Agreement is not considered another plan. The plan that has been replaced and the Plan established under a Standardized Adoption Agreement must be of the same type (e.g., both Defined Contribution Plans) in order for the Employer to be able to rely on the Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416 without obtaining a determination letter. In addition, an Employer that adopts a Defined Contribution Plan under a Standardized Adoption Agreement will not be considered to have maintained another plan merely because the Employer has maintained another Defined Contribution Plan(s), provided such other plan(s) has been terminated prior to the Effective Date of the Plan established under a Standardized Adoption Agreement and no Annual Additions have been credited to the account of any Participant under such other plan(s) as of any date within a Limitation Year of the Plan established under a Standardized Adoption Agreement. Likewise, an Employer that adopts a Defined Contribution Plan established under a Standardized Adoption Agreement that is first effective on or after the Effective Date of the repeal of Section 415(e) will not be considered to have maintained another plan merely because the Employer has maintained a Defined Benefit Plan(s), provided the Defined Benefit Plan(s) has been terminated prior to the Effective Date of the Defined Contribution Plan established under a Standardized Adoption Agreement. (2) An Employer that adopts a Plan established under a Standardized Adoption Agreement may not rely on an opinion letter with respect to: (i) whether the timing of any amendment to the Plan (or series of amendments) satisfies the nondiscrimination requirements of Regulations Section 1.401(a)(4)-5(a), except with respect to Plan amendments granting past Service that meet the safe harbor described in Regulations Section 1.401(a)(4)-5(a)(3) and are not part of a pattern of amendments that significantly discriminate in favor of Highly Compensated Employees; or (ii) whether the Plan satisfies the effective availability requirement of Regulations Section 1.401(a)(4)-4(c) with respect to any benefit, right, or feature. An Employer that adopts a Plan established under a Standardized Adoption Agreement as an amendment to a plan other than a Plan established under a Standardized Adoption Agreeement may not rely on an opinion letter with respect to whether a benefit, right, or feature that is prospectively eliminated satisfies the current availability requirements of Regulations Section 1.401(a)(4)-4. Such an Employer may request a determination letter if the Employer wishes to have reliance as to whether the prospectively eliminated benefit, right, or feature satisfies the current availability requirements.

Employer Reliance Using A Standardized Adoption Agreement. An Employer establishing a Plan under a Standardized Adoption Agreement in conjunction with this Prototype Plan may rely on that Plan’s opinion letter, except as provided in (1) through (3) and paragraph (c) below if the Sponsor of such Plan or Plans has a currently valid favorable opinion letter, the Employer has followed the terms of the Plan(s), and the coverage and contributions or benefits under the Plan(s) are not more favorable for Highly Compensated Employees than for other Employees. (1) An Employer may not rely on an opinion letter for a Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416, without obtaining a determination letter, if the Employer maintains at any time, or has maintained at any time, another plan including a Plan established under a Standardized Adoption Agreement that was qualified or determined to be qualified covering some of the same Participants. For this purpose, a plan that has been properly replaced by the adoption of a Plan established under a Standardized Adoption Agreement is not considered another plan. The plan that has been replaced and the Plan established under a Standardized Adoption Agreement must be of the same type (e.g., both Defined Contribution Plans) in order for the Employer to be able to rely on the Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416 without obtaining a determination letter. In addition, an Employer that adopts a Defined Contribution Plan under a Standardized Adoption Agreement will not be considered to have maintained another plan merely because the Employer has maintained another Defined Contribution Plan(s), provided such other plan(s) has been terminated prior to the Effective Date of the Plan established under a Standardized Adoption Agreement and no Annual Additions have been credited to the account of any Participant under such other plan(s) as of any date within a Limitation Year of the Plan established under a Standardized Adoption Agreement. Likewise, an Employer that adopts a Defined Contribution Plan established under a Standardized Adoption Agreement that is first effective on or after the Effective Date of the repeal of Section 415(e) will not be considered to have maintained another plan merely because the Employer has maintained a Defined Benefit Plan(s), provided the Defined Benefit Plan(s) has been terminated prior to the Effective Date of the Defined Contribution Plan established under a Standardized Adoption Agreement. (2) An Employer that adopts a Plan established under a Standardized Adoption Agreement may not rely on an opinion letter with respect to: (i) whether the timing of any amendment to the Plan (or series of amendments) satisfies the nondiscrimination requirements of Regulations Section 1.401(a)(4)-5(a), except with respect to Plan amendments granting past Service that meet the safe harbor described in Regulations Section 1.401(a)(4)-5(a)(3) and are not part of a pattern of amendments that significantly discriminate in favor of Highly Compensated Employees; or (ii) whether the Plan satisfies the effective availability requirement of Regulations Section 1.401(a)(4)-4(c) with respect to any benefit, right, or feature. An Employer that adopts a Plan established under a Standardized Adoption Agreement as an amendment to a plan other than a Plan established under a Standardized Adoption Agreeement may not rely on an opinion letter with respect to whether a benefit, right, or feature that is prospectively eliminated satisfies the current availability requirements of Regulations Section 1.401(a)(4)-4. Such an Employer may request a determination letter if the Employer wishes to have reliance as to whether the prospectively eliminated benefit, right, or feature satisfies the current availability requirements.

Employer Reliance Using A Standardized Adoption Agreement. An Employer establishing a Plan under a Standardized Adoption Agreement in conjunction with this Prototype Plan may rely on that Plan’s opinion letter, except as provided in (1) through (3) and paragraph (c) below if the Sponsor of such Plan or Plans has a currently valid favorable opinion letter, the Employer has followed the terms of the Plan(s), and the coverage and contributions or benefits under the Plan(s) are not more favorable for Highly Compensated Employees than for other Employees. (1) An Employer may not rely on an opinion letter for a Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416, without obtaining a determination letter, if the Employer maintains at any time, or has maintained at any time, another plan including a Plan established under a Standardized Adoption Agreement that was qualified or determined to be qualified covering some of the same Participants. For this purpose, a plan that has been properly replaced by the adoption of a Plan established under a Standardized Adoption Agreement is not considered another plan. The plan that has been replaced and the Plan established under a Standardized Adoption Agreement must be of the same type (e.g., both Defined Contribution Plans) in order for the Employer to be able to rely on the Plan established under a Standardized Adoption Agreement with respect to the requirements of Code Sections 415 and 416 without obtaining a determination letter. In addition, an Employer that adopts a Defined Contribution Plan under a Standardized Adoption Agreement will not be considered to have maintained another plan merely because the Employer has maintained another Defined Contribution Plan(s), provided such other plan(s) has been terminated prior to the Effective Date of the Plan established under a Standardized Adoption Agreement and no Annual Additions have been credited to the account of any Participant under such other plan(s) as of any date within a Limitation Year of the Plan established under a Standardized Adoption Agreement. Likewise, an Employer that adopts a Defined Contribution Plan established under a Standardized Adoption Agreement that is first effective on or after the Effective Date of the repeal of Section 415(e) will not be considered to have maintained another plan merely because the Employer has maintained a Defined Benefit Plan(s), provided the Defined Benefit Plan(s) has been terminated prior to the Effective Date of the Defined Contribution Plan established under a Standardized Adoption Agreement. (2) An Employer that adopts a Plan established under a Standardized Adoption Agreement may not rely on an opinion letter with respect to: (i) whether the timing of any amendment to the Plan (or series of amendments) satisfies the nondiscrimination requirements of Regulations Section 1.401(a)(4)-5(a), except with respect to Plan amendments granting past Service that meet the safe harbor described in Regulations Section 1.401(a)(4)-5(a)(3) and are not part of a pattern of amendments that significantly discriminate in favor of Highly Compensated Employees; or (ii) whether the Plan satisfies the effective availability requirement of Regulations Section 1.401(a)(4)-4(c) with respect to any benefit, right, or feature. An Employer that adopts a Plan established under a Standardized Adoption Agreement as an amendment to a plan other than a Plan established under a Standardized Adoption Agreeement Agreement may not rely on an opinion letter with respect to whether a benefit, right, or feature that is prospectively eliminated satisfies the current availability requirements of Regulations Section 1.401(a)(4)-4. Such an Employer may request a determination letter if the Employer wishes to have reliance as to whether the prospectively eliminated benefit, right, or feature satisfies the current availability requirements.