The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with an advisor in New York is representative of a common inquiry related to mandatory plan document amendments. The advisor asked:
“One of my plan sponsor clients just received a letter from his document provider regarding the need to amend and restate his 401(k) plan document. Is the IRS requiring a mass restatement of plans for some reason?”
Highlights of Discussion
• Yes, it is time for another mandatory amendment/restatement of retirement plan documents. The IRS is requiring all pre-approved plans (i.e., prototype or volume submitter) defined contribution (DC) plans to be restated for the Pension Protection Act of 2006 (PPA 2006), and various other changes enacted since the last required mass restatement, which ended April 30, 2010, and encompassed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
• In addition to the provisions of PPA, this restatement will include the following legislative and regulatory changes:
— IRC §415 regulations regarding post-severance compensation
— The Heroes’ Earning Assistance and Relief Tax Act of 2008
— Worker, Retiree and Employer Recovery Act of 2008
— Katrina Emergency Tax Relief Act of 2006
— GULF Opportunity Zone Act of 2005
• The window for amending/restating pre-approved DC plans for PPA et al is now open and is scheduled to close April 30, 2016.
• Pre-approved defined benefit plans must be restated for PPA as well, but the restatement window will follow the DC restatement window.
• Individually designed plan documents are subject to yet a different restatement cycle, based on their sponsoring employer’s identification number.
• Several plan document providers have indicated they will begin restating their clients’ preapproved DC plan documents for PPA in the third quarter of 2014.
Conclusion
Sponsors of pre-approved DC plans are facing another mandatory restatement of their retirement plan documents. Therefore, they should be on the look out for important communications relating to the restatement process from their document providers.
The Columbia Management Retirement Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC, a third-party industry consultant that is not affiliated with Columbia Management. For informational purposes only. Please consult a tax advisor or attorney for specific tax or legal needs. © 2014 Columbia Management Investment Advisers, LLC. Used with permission.
