A restatement refers to the complete re-writing of the plan document in order to incorporate any legislative changes and amendments that may have been adopted since the last time the document was re-written.
Why do we have to restate our plan?
It is IRS policy to require restatements for pre-approved plans every 6 years. The current restatement of defined contribution plans is being referred to as the “PPA restatement” after the Pension Protection Act.
The Pension Protection Act (PPA) was a sweeping piece of legislation enacted in 2006 which made major changes in the tax laws regarding retirement plans.
What is a Pre-Approved plan?
A pre-approved plan is one that the IRS has reviewed and approved all of the plan provisions that are available. Jim Hallinan Pension Consulting uses IRS pre-approved Volume Submitter Documents in order to minimize the cost of preparing a plan document for our clients and to maximize flexibility to design plans.
Is the restatement mandatory?
Yes. Not restating your plan could jeopardize the plan’s tax qualified status.
What is the process and deadline for restating the plan documents?
We will be mailing letters to our clients during the week of May 18, 2015. The letter will include information regarding fees and an authorization to begin the restatement process.
Defined Contribution plans must be restated by April 30, 2016. It is our goal to update our clients’ plans by the end of 2015. The first quarter of the year is a busy time for our office. We encourage you to return your authorization form as soon as possible so that we may update your plan well before the deadline.
We just started our plan. Do we need to restate our document?
In most cases, yes. Unless your plan was established in the last few months, the PPA Restatement Document was not approved. As a result, you must restate.
Can we make changes to our plan during the restatement process?
Yes. The restatement process presents the opportunity to redesign the plan to better meet your needs. It is an excellent time to review provisions for loans or hardships, adjust the plan’s contribution rules or make other plan changes.
Can we pay for the restatement from the plan?
Yes. Since the restatement is required, the Department of Labor allows the fee to be paid out of plan assets. If your plan currently has a forfeiture balance this may be used to offset the restatement fee.
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