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From time to time, all qualified retirement plans are required to be updated to reflect recent legislative and/or regulatory changes. Some of these updates are made through plan amendments, but others require plan documents to be completely re-written (a process known as “restating” the plan.)
The deadlines for adopting these updates are usually dependent on the type of plan and plan document. For example, a defined contribution plan, e.g. a 401(k) plan or profit-sharing plan that uses a prototype document must generally be restated every 6 years. Alternatively, a defined-contribution plan using an individually designed plan must generally be restated every five years. Amendments may still be required in between these mandatory restatements.
As posted in the IRS Announcement 2020-07, the required amendment restatement for 401(k), profit-sharing, and money purchase pension plans is scheduled to open on August 1, 2020, and close, after a two-year period, on July 31st, 2022. That said, different deadlines may apply for certain individually designed plans.
Regardless of the type of plan/plan document or the service-providers involved, plan sponsors are required to maintain fully executed copies of all plan documents, amendments, and restatements since the inception of the plan. If your plan is audited by the Internal Revenue Service (IRS), they will ask to see signed plan documents and will review to make sure they are up to date for all required remedial amendments.
If you did not timely adopt a required update or you are unable to locate a signed copy, the IRS offers a voluntary correction program. This allows you to bring your plan document back into compliance for a fee that is much lower than the penalties that could otherwise be imposed.
For more information, we suggest you contact your plan provider for more details or contact us here at DP-Grow and we would be happy to conduct a thorough review of your plan and/or answer any questions you may have.
To get in contact please reach out to Dennis Tender: dtender@dp-grow.com │804-729-3819
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