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Plan Sponsors, Act Now – The Deadline to Submit the Updated Version of Your Pre-Approved Defined Contribution Plan Is Quickly Approaching

Posted by Corey F. Schechter | Apr 04, 2016 | 0 Comments

Plan sponsors of defined contribution plans utilizing either a volume submitter (VS) or Master & Prototype (M&P) plan (i.e., “pre-approved plans”) may be surprised to learn that a restated (or “updated”) version of their plan document must be adopted no later than April 30, 2016. See Internal Revenue Bulletin: 2014-17, athttps://www.irs.gov/irb/2014-17_IRB/ar08.html.

The purpose of restating the plan document is to incorporate all required legislative updates since the last restatement period. The Internal Revenue Service (IRS) has implemented a cycle program for tax qualification status in which pre-approved defined contribution plans must be amended by adopting a restatement of the entire plan by the plan sponsor every six years. The deadline by which to adopt a restated plan under the previous cycle was April 30, 2010. If your pre-approved plan has not been updated since that time to incorporate all legislative changes required under the current cycle, and if your updated plan is not timely adopted (i.e., on or before April 30, 2016), your plan faces substantial penalties imposed by the IRS, up to and including disqualification of the entire plan (and, therefore, revocation of the favorable tax treatment which the plan has enjoyed).

Now is a good time to confirm that your pre-approved defined contribution plan has already been, or will be, timely adopted prior to the April 30, 2016, deadline. Additionally, restatement of the plan presents a cost-effective opportunity to amend or add any optional provisions in your plan document which may better suit your purposes and objectives in adopting the defined contribution plan.

If your plan's service provider has not yet reached out to you regarding the update and adoption of a newly restated pre-approved plan document for your defined contribution plan, be sure that you contact them as soon as possible in order to meet the April 30, 2016, deadline. Our firm also has drafted our own plan document which is qualified under the volume submitter program, and unlike plans made available by brokerage firms and insurance companies, you are free to select investment platforms with a financial advisor of your choice.

If you are seeking to adopt a new defined contribution plan, or alternatively need to now update your current defined contribution plan with a newly restated plan document, call Corey Schechter at (858) 444-2300.

About the Author

Corey F. Schechter

Corey Schechter practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Employment and Labor Law.

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