IRS Reminds Plan Sponsors of Plan Restatement Deadline

April 30, 2016, is the deadline for employers using pre-approved retirement plan documents to sign an updated version of their 401(k), profit-sharing or other defined contribution retirement plans.

Retirement plan documents must be revised when the law changes.

In an updated web page, the Internal Revenue Service (IRS) reminds plan sponsors that document providers who sell pre-approved plans update the plan in its entirety once every six years and request a new opinion/advisory letter from the agency. The IRS generally approves all updated defined contribution plans at the same time. Most opinion/advisory letters for the latest round of pre-approved defined contribution plans were issued on March 31, 2014. Employers have two years, until April 30, 2016, to adopt these updated plans.                           

After April 30, 2016, if a plan sponsor hasn’t adopted a restated plan, the plan does not comply with the tax laws and may be ineligible for tax benefits.

Providers should have sent plan sponsors a revised plan document, approved by the IRS, which complies with the Pension Protection Act of 2006 (PPA) and other law changes listed on the 2010 Cumulative List of Changes in Retirement Plan Qualification Requirements. Even if plan sponsors made amendments to your plan to reflect these laws as they became effective (interim amendments), they are still required to adopt a PPA plan document.

Most employers don’t need to apply for a separate IRS determination letter for a pre-approved plan, and a plan sponsor who adopts a master & prototype plan (standardized or non-standardized) may not apply for its own determination letter. Instead, the plan sponsor should rely on the approval letter issued to the document provider.

An adopting employer who made limited modifications to its volume submitter plan may apply for a determination letter on Form 5307, “Application for Determination for Adopters of Modified Volume Submitter Plans.” If the modifications are extensive, causing the plan to be treated as an individually designed plan, the employer must instead file Form 5300, “Application for Determination for Employee Benefit Plan.”

More information is here.