Client is considering merging their money purchase pension plan (MPPP) into their profit sharing (PS) plan as of September 30, 2001 (last day of both plan years). As the surviving PS will be updated for GUST before the remedial amendment period (on a prototype, so by 12/31/02), I am assumming that the MPPP does not require GUST restatement prior to the merger.

Any agreement or disagreement?

the mpp plan must be amended for gust even though it will be terminated/merged.

I recently attended a seminar where the presenting atty stated that where an MPPP plan is merging with a PSP prior to end of remedial amendment period, "the employer could update the MPPP for GUST prior to the merger, OR it could update the resulting plan (PSP) and have that restatement cover both the PSP and the prior MPPP. If the employer intends for the PSP restatement to cover both plans, the employer should make certain the restated document identifies that the restatement is for both the PSP and the MPPP. The corporate minutes also should confirm that the restatement will cover both plans." Does this conflict with your conclusion?

I have subsequently received "expert advice" indicating that the MPPP would not need to be updated for GUST as long as the PSP that it is merged into is updated for GUST before the remedial amendment period.

I like the idea of the confirming in the corporate minutes that the GUST restatement is intended for both plans.


Thanks for your input!

I seem to recall that there is "ancient" (shortly after ERISA was enacted) formal advice to this effect from the IRS.

On a side note, but dealing with the same issue. Is it necessary to vest all in the mpp @ 100% after the merger? If not, would it be a safer way to eliminate potential problems in the future?

The question of vesting has been discussed on these Message Boards recently. I believe the conclusion is that 100% vesting is not required when a DC plan is merged into a DC plan.

You may merge plans before they are updated for GUST, but the GUST restatement will need to cover both predecessor plans. If the plans are virtually identical, the GUST restatement shouldn't be a big deal. On the other hand, if the plans are very different, you need to make certain that all of the GUST provisions have all of the correct effective dates for both predecessor plans. [Note: This is more likely to be a prolbem if you want to use a prototype document.]

I advised a client on merging two plans prior to the GUST restatement. Counting my attempt at good-faith EGTRRA amendments, the plan has almost five pages of effective dates.

If the approach of amending the surviving plan to cover all plans that were merged into it prior to the GUST update is used, will the plan sponsor need to include the plan documents for all of the plans involved in the merger in the GUST determination application, or is it enough just to file the restated surviving plan document?

What do you think of using the 7 page amendment for GUST to bring the MPP into compliance with GUST before merging it into the PSP or 401(k)? I obtained this 7 page amendment from Corbel to use with terminating plans in lieu of waiting until we finally got an approved GUST document.