Qualified retirement plans must restate their documents every five to six years (based on the type of document) in order to remain compliant. Here are a few questions that are commonplace during this time:
Why do we need to restate the plan document?
Regulations get passed from time to time, such as the Pension Protection Act (PPA) of 2006 or the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. These regulations require amendments to plan documents, but these amendments are considered “interim” or “good-faith,” which means they aren’t incorporated into the plan document but are separate. Under the current IRS rules, plan sponsors must fold these amendments into the plan and, as such, the plan gets re-stated every six years (for pre-approved documents).
What is included in this restatement?
This restatement incorporates the amendments from the Pension Protection Act (PPA) of 2006, The Heroes Earnings Assistance and Relief Act of 2008, and the Worker, Retiree, and Employer Recovery Act of 2008. Also included are the Final Section 415 Regulations, Katrina Emergency Tax Relief Act of 2005, and any other amendments you may have made to the document since your last restatement. Some of the items included in these amendments were regulations on automatic enrollment and QDIAs.
When is the restatement required to be completed?
The window for restatements began on May 1, 2014. The final day to have documents restated is April 30, 2016. Most restatements have begun already or will begin shortly, with the goal of being completed sometime this year. You should be notified by the administrator of the plan prior to the restatement.
Should we consider other amendments during this time?
Yes, plan sponsors should review their documents prior to the restatement to see if there are any changes they would like to make. It is important to review the provisions to ensure they meet the plan’s goals. Some possible considerations include automatic features (auto-enrollment) or Roth (contributions and conversions).
Things to Remember
- Plan documents must re-state every six years to incorporate “interim” amendments.
- The restatements must be completed by April 30, 2016.
- Consider other changes to your plan documents during this time.
