Compliance April 28, 2016

IRS Kit Explains Corrections for Missed Plan Restatements

A new correction method was introduced earlier this month.

Reported by

The Internal Revenue Service (IRS) has created a kit for plan sponsors that maintain a pre-approved defined contribution plan but failed to adopt a new plan document by April 30, 2016, and are correcting the failure by adopting a pre-approved defined contribution retirement plan that reflects the provisions of the Pension Protection Act (PPA).

If plan sponsors do not sign a restated defined contribution plan document as required on or before the April 30, 2016, deadline, the retirement plan is no longer entitled to tax-favored treatment. Plan sponsors can restore the tax-favored status of their plan by adopting a restated PPA pre-approved plan document and filing a submission for a Voluntary Correction Program (VCP) compliance statement with the IRS. If the submission is approved, the IRS will treat the plan as entitled to tax-favored status.

For more stories like this, sign up for the PLANADVISERdash daily newsletter. 

Previously, the only way an employer could correct not signing a preapproved DC retirement plan by the deadline was to complete a submission under the VCP. A new option allows the financial institution or service provider to request a closing agreement on a plan sponsor’s behalf.

Before making a VCP submission to the IRS, the agency suggests plan sponsors check with the law firms, banks, brokers, other financial institutions or plan administrators that created the pre-approved defined contribution plan to see if they will be making a special request for a closing agreement on behalf of all adopters who missed the deadline.

You Might Also Like:

Compliance

May 14th, 2025

2026 HSA Limits Released

For 2026, the IRS defines an HDHP as a health plan with an annual deductible that is not less than...

Data & Research

April 17th, 2025

Plan Sponsors Remain Focused on Workforce Retirement Benefits

Repositioning defined contribution plans as income programs could be the best path forward, according to a recent MetLife study.

Compliance

January 13th, 2025

IRS, Treasury Release Proposed Regulations on SECURE 2.0 Provisions

The agencies issued guidance on how plan administrators can comply with the Roth catch-up rule that begins in 2026 and,...

Data & Research April 28, 2016

Jobs, Finances Causing Stress for Workers

Twenty percent report feeling extremely stressed.

Reported by

Lee Barney

Many workers are feeling high levels of stress, according to a Lockton report, “Finding the Links Between Retirement, Stress and Health.” Twenty percent of 600 people surveyed say they feel extremely stressed, and point to their jobs and financial situation as the root causes.

For those who say their financial situation is fair to poor, 40% report high levels of stress. However, for those who believe their financial situation is good to excellent, only 28% say they are extremely stressed.

For more stories like this, sign up for the PLANADVISERdash daily newsletter. 

Asked whether there is a high correlation between their financial situation and stress, 20% said yes, 25% said no and 50% were neutral. Those who felt higher levels of stress tended to be less educated or women with incomes below $50,000.

Among those with fair to poor financial situations, 25% say they have difficulty managing money. This drops to a mere 3% of those with good to excellent finances.

Fifty percent of the respondents say they carry debt of $10,000 or more, not including their mortgage, and they are paying down this debt at a weighted average of $400 a month. The majority of respondents are carrying a mortgage, averaging $1,075 a month.

NEXT: How stress translates to work ethics

Those who feel financial stress report feeling ill, taking time off from work and not being as productive as they could be. They feel tired, and suffer from headaches, depression and other ailments. “Often, this group would be absent or disengaged from their work,” according to the Lockton report. “They were twice as likely to use sick time when they were not ill and more likely to report being nonproductive. Half of all respondents reported using work time to review financial statements or pay bills.”

Forty-three percent think that having a retirement plan at work eases their financial concerns somewhat, and 52% say such a plan eases their concerns a great deal. Being successful in the plan also mattered; those who were most retirement ready had the highest levels of job satisfaction.

Overall, 70% think they are knowledgeable about retirement, but this drops to 54% for those experiencing high levels of financial stress. For those who feel low financial stress, 84% think they are knowledgeable about retirement. This confidence in retirement knowledge may not match up with reality, as more than half contribute 6% or less to their retirement plan.

NEXT: How to ease financial concerns

Survey respondents said creating a financial plan, meeting with a financial professional and receiving investment education would decrease their financial concerns. Among the most stressed employees, debt management and paying off credit card balances are their two biggest goals.

Stockton concludes that more well-rounded financial wellness programs are needed: “Benefits advisers and service providers have already begun the transition from narrowly focused retirement education programs to more integrated financial well-being efforts. Savings-oriented engagement strategies must balance immediate debt, family support and consumer-driven health care costs with long-term investment needs.”