Between May 1, 2014 and April 30, 2016, all pre-approved defined contribution plans (e.g. most 401(k), profit sharing, money purchase and other qualified plans) must be restated to reflect the provisions of the Pension Protection Act of 2006 (“PPA”) in order to maintain the tax qualified status of the plan.
By way of background, in the past, the plan restatement cycles mandated by the Internal Revenue Service have been seemingly inconsistent. The Internal Revenue Service has now created a regular six-year restatement cycle. Pre-approved plans must now be restated every six years to incorporate interim amendments and any discretionary amendments that have been adopted by plan sponsors since the last plan document restatement. At the end of this six-year period, there will be a two-year window in which to update the plan document. We have just entered the second six-year restatement cycle for defined contribution plans under this new system. As stated above, the PPA restatement window began May 1, 2014 and will end on April 30, 2016.
You should consider restating your Company’s plan document earlier, rather than later, in the PPA restatement period. The required restatement of your Company’s plan provides a great opportunity to review your current plan document to ensure you are adhering to the provisions in your plan as well as to make any desired changes and plan improvements necessary to better meet your Company’s unique retirement plan goals and objectives. For those of you who went through the EGTRRA restatement several years ago, you may recall how quickly time passes.