Plan for PPA restatements soon
Posted On: 10-15-2015 | Posted By: Faye Johnson, QPA
Sponsors of certain types of retirement plans have until April 30, 2016, to update their plan documents to include changes brought forth by the Pension Protection Act and other recent legislation.
Plans must always comply with current laws, but the Internal Revenue Service realizes it would be difficult for plan sponsors to rewrite or “restate” their entire plan for every legislative or regulatory change. Plan sponsors are left to operate their plans in “good faith” to comply with the law to the best of their ability and periodically adopt interim plan amendments known as “good faith” amendments. Approximately every six years, the IRS requires a full plan restatement.
The newest required restatement, often referred to as the PPA restatement, is named after the Pension Protection Act. The majority of 401(k) , profit sharing and money purchase plans use documents pre-approved by IRS known as “prototype” or “volume submitter” plans; the window for restating pre-approved plans began on May 1, 2014 and ends on April 30, 2016. Defined benefit pension plans, individually designed and other plan types have different restatement dates depending on the type of plan. To ensure your plan meets the appropriate deadline, contact your WK advisor.
Actions to take now
- If you have already signed your PPA restatement and distributed a new Summary Plan Description to your employees, you’re done.
- If you still need to restate the plan documents, contact your provider soon. Because of some less favorable changes in the new laws, your provider may want to wait until later in the restatement period to prepare your new documents. Be sure you and your provider know when your restatement deadline occurs.
- Now is a great time to review your plan to make sure it is still the best design for you. Changes in your business or employee demographics might warrant looking at a different plan design to better accomplish your retirement plan goals. The experienced professionals at Williams-Keepers LLC can assist in reviewing your current plan, even if you use another provider.
Remember, this restatement is not voluntary and noncompliance can result in serious consequences. However, if you do miss the deadline, don’t panic. The IRS has correction programs in place in the event you inadvertently fail to timely restate. But, like most things, prevention is better than a cure, so make sure to keep your restatement deadline as your goal.