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Retirement Plan Restatements

Adopters of Pre-approved Defined Contribution Plans Have to Adopt New Restated Version by April 30

Scott E. Hamner

Stacked Folders    Federal retirement plan law requires that a retirement plan have a written plan document.  

    The majority of employers sponsoring a qualified retirement plan now use a “pre-approved plan” for the plan document.  There are two basic types of pre-approved plans: a “prototype plan” and a “volume submitter” plan.  Most pre-approved plans are prototype plans.  “Pre-approved” means that the IRS has reviewed and approved the technical provisions required for all plans, e.g. the limitation on compensation which may be used for determining benefits, and also the language for the various optional provisions which describe who is eligible, the accrual of benefits, vesting, distributions, etc.  In general, a plan sponsor which adopts a pre-approved plan document to create its plan without modifying that pre-approved language can rely on the IRS opinion letter for that pre-approved document.  Therefore, although there can be errors in plan administration and operations which the IRS may discover on audit and require corrections, the pre-approved plan document basically is unassailable. 

    When there is a change in the law regarding qualified retirement plans, the employer generally should update its plan.  However, there often are statutory or IRS-created exceptions or delays for those changes.  Irrespective of any extended dates for amendments, the IRS requires that pre-approved qualified retirement plans be updated for all changes in the law every six years.  

    Adopters of pre-approved defined contribution plans are now at the end of that six year period and have to adopt a new restated and up-to-date version of their plan no later than April 30, 2016.  With that deadline quickly approaching, employers using a pre-approved defined contribution plan need to make sure that they have updated their document. 

      If you are unsure or unclear whether your company’s plan has been updated, or whether the provider for your document has your plan on its list for updating, you need to contact your document provider and ask.

     Should you need any assistance regarding the administration of or the documentation for your retirement plan, contact Eastman & Smith


Disclaimer:  The article in this publication has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.