A very small employer (3-5 employees) established a 401(k) about 3 years ago. No deferrals were ever made and no employer money was contributed. It seems like termination of the Plan would require the adoption of a very simple, non-technical termination amendment...something along the lines of "The Plan is hereby terminated effective ______, 2009". With no plan assets and no need for tax qualification why bother with the expense of adopting an EGTRRA restatement, PPA amendment etc... Does anyone feel differently?

If a tree falls in the woods and nobody is there to hear it, does it make a noise?

The employees had a choice (which is of significance in tax law), but as you point out, no fund--so what are you amending other than letting the employees know that they no longer have the choice?

To the extent that the employer took ordinary and necessary business expense deductions with respect to payment of the Plan's administrative expenses, if there were any (which there probably were), or a tax credit for expenses related to the establishment of the Plan (IRC Section 45E), then I would say that amendment of the Plan to make it current as of the effective date of termination would be necessary as a precaution against potentially losing the deduction/credit on audit. (Of course, with no $$ in the plan ever, the deduction/credit is in danger, anyway. But I'd still amend.)

I didn't think about the tax credit. However, the plan was qualified when it was adopted, so I'm not really concerned about any tax credit. At this point it seems like qualification only matters for purposes of plan assets.