Restatement Q&A

What is a “restatement”?

A “restatement” is a modification of the written plan documents to incorporate the provisions needed to satisfy revised tax and pension law requirements.  The IRS has approved entirely new plan documents containing the necessary amendments and each employer who sponsors an existing prototype plan will need to adopt and sign the new prototype documents to retain the tax advantages of the plan.

Why must our retirement plan be restated?

Several changes to the tax law made over the past few years impose new requirements for tax-qualified retirement plans.  Plans must be “restated” in order to incorporate those requirements and bring those plans into legal compliance.  These changes were brought about by the Economic Growth and Tax Relief Reconciliation Act of 2001 (known by the acronym “EGTRRA”).

What is the EGTRRA restatement period?

Employers who have adopted the Prototype Defined Contribution Plan must restate their plan by April 30, 2010 by signing the newly IRS-approved plan documents.  This is also the date by which such employers need to submit their plans for determination letters, if necessary or desired.  The submission of pre-approved plans is generally made using IRS Form 5307. 

Must I submit my retirement plan for an IRS determination letter?

Generally, employers that adopt a Standardized Prototype Plan do not need to submit their plans and may rely on the sponsor’s opinion letter.  In certain circumstances, an employer may not have this reliance and must request a favorable determination letter to ensure that the plan document satisfies all qualification requirements.  Employers that adopt a Nonstandardized Prototype Plan may rely on the document sponsor’s opinion letter if (1) the Employer’s plan is identical to the approved Prototype Plan, (2) the employer has completed the pre-approved provisions under the approved plan, and (3) the employer has followed the terms of the plan.  There are circumstances when an employer that meets all of these requirements will not have reliance and must request a favorable determination letter to ensure that the plan document satisfies all qualification requirements.  If you have any questions about filing for a determination letter, please contact us at the number provided below or consult with your tax advisor.

When are amendments required for the Pension Protection Act of 2006 (PPA)?

Revenue Procedure 2007-44 clarifies that interim amendments for PPA are not needed prior to the last day of the 2009 plan year.  This includes any elective PPA provisions such as automatic enrollment or non-spousal benefit rollovers.  Further guidance from the IRS is necessary on various PPA provisions and an amendment will be available shortly for ongoing plans.  However, terminating plans must be updated to reflect all provisions of the law that are effective as of the date of termination. 

How will your organization be helping us with the restatement?

Our organization will provide you with signature-ready IRS-approved plan documents that reflect your current plan provisions and the new provisions required by law.  [PROVIDERS WILL WANT TO PROVIDE MORE DETAIL ABOUT THEIR SPECIFIC RESTATEMENT PROGRAMS HERE, SUCH AS HOW INFORMATION WILL BE GATHERED FROM THE PLAN SPONSOR CONCERNING EGTRRA AMENDMENT OPTIONS.]

What if we decide not to restate our plan?

If you do not restate your retirement plan within the specified time frame, you will no longer be in compliance with the federal tax law’s plan qualification requirements.  That means your plan will no longer qualify for favorable tax treatment for both the plan sponsor and its participants and you and your employees would be subject to additional taxes, interest, and penalties.  Failing to restate will have very serious tax consequences.

How do we find out more about the restatement process?

Contact us at 920-720-0005 and request to speak with your dedicated account manager.

 

 

 
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