Business Law

Deadline Looming for Changes to Your Company’s Qualified Plan

401kpic3Preapproved, defined contribution plans, such as 401(k), profit sharing and money purchase pension plans, must be amended and restated to comply with recent changes in tax and ERISA laws by April 30, 2016. Failure to timely amend and restate your company’s preapproved, defined contribution plan by this date could cause it to be disqualified for tax purposes causing your company and plan participants to incur additional taxes and penalties.

A retirement plan is preapproved if the Internal Revenue Service has reviewed and approved the form of the plan which an individual plan sponsor may use to amend and restate its plan. These types of preapproved plans are called “prototype or volume submitter plans”. A preapproved plan consists of an adoption agreement, upon which a company can select the specific provisions which will apply to it and its plan participants, and an underlying plan document which contains provisions that are generally applicable to all defined contribution plans. Typically, a plan administrative company, a mutual fund family, other financial institution or a law firm will submit the general form of an adoption agreement and plan document to the Internal Revenue Service for approval. Once the form of an adoption agreement and plan document are approved by the Internal Revenue Service, the firm submitting the form will have its customers or clients use those documents to amend and restate the individual plans for their companies. Almost all plans now sponsored by employers are documented on preapproved forms.

The company or organization providing the forms for your company’s defined contribution plan should have contacted you by now regarding the amendment and restatement of that plan. If this has not happened or the forms have been provided but have not been completed and signed, you should promptly contact the provider to insure that your company’s plan is timely updated.

If there are modifications in the language of a preapproved adoption agreement or plan used to amend and restate your company’s plan from the language originally approved by the Internal Revenue Service, your company’s plan, after it is amended and restated, can be submitted with Internal Revenue Service Form 5307 on behalf of your company to the Internal Revenue Service for a determination letter to the effect that the amended and restated plan documents, as modified, comply with current tax and ERISA laws. However, the Internal Revenue Service will not review a plan for such a determination letter if its terms do not deviate from the plan forms that were originally approved by the Internal Revenue Service. Applications on Form 5307 for determination letters must be also be filed with the Internal Revenue Service by April 30, 2016.

The deadline for restating preapproved defined benefit pension plans is April 30, 2017.

If you would like to discuss or have questions regarding the April 30, 2016 amendment and restatement deadline for preapproved, defined contribution plans, please contact Larry Sewell at (314) 552-4107 or at

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