Year End Reminder for Employers Sponsoring Qualified Retirement Plans
As 2009 draws to a close and offices start to empty for holiday vacation, we want to remind you that there may still be year end approvals that are needed for your qualified retirement plan (e.g. 401(k), pension, 403(b)).
If your company sponsors a qualified retirement plan, you may have received written plan amendments from your plan document provider (often called a "Pension Protection Act Amendment," "PPA Amendment" or "EGTRRA Restatement") that you were told to execute and return to the document provider before year-end. We have noticed that many clients executed these plan amendments and returned them to the document provider, but did not obtain the required board approval to formally adopt them. Your plan document controls how the amendment process works for your plan. Most plan documents require board approval of all plan amendments.
Failure to timely approve a required amendment to your plan can jeopardize its tax-qualified status and generally result in the need to submit an application and pay a fee to the IRS to obtain approval of a retroactive amendment.
If you did not receive or execute a written plan amendment for your plan this year, following is some background on who needs an amendment and the applicable deadlines.
- All qualified retirement plans must be in documentary compliance with the Pension Protection Act ("PPA") by December 31, 2009 (for calendar year plans).
- Your plan should already be operating in compliance with the mandatory PPA provisions and any optional PPA provisions that you chose to implement.
- To bring plans into documentary compliance with the PPA generally requires formal adoption of a plan amendment or restatement.
- Companies that use prototype or volume submitter plan documents should have already received an amendment or plan restatement from their plan provider to use for this purpose. In some cases, you are required to formally adopt the amendment. In other cases, the document provider automatically adds the amendment to its basic plan document and you are not required to do anything.
- To complicate matters, many prototype and volume submitter plan providers include the PPA provisions in the EGTRRA restatement they provide to clients. The deadline for adopting this EGTRRA restatement is not until April 30, 2010, but, if the PPA provisions are included in the EGTRRA restatement, sponsoring employers must adopt the restatement by December 31, 2009 (for calendar year plans).
If you have an individually-designed plan document for which MLA is responsible, you should have received a separate e-mail or phone call regarding your compliance. If you use a prototype or volume submitter document and you have questions as to whether you have taken all actions necessary to formally adopt the PPA Amendment by the December 31, 2009 deadline, please let us know.
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