Why Should You Review Your Retirement Plan Documents Now?

Paul McEwan | March 4th, 2014

“If it’s not broken, don’t fix it.” A lot of people adhere to this philosophy, but in some cases, a review of how something works is not only helpful, it is required. If a business’s retirement plan seems to be working fine, and there doesn’t appear to be anything out of place, many employers believe there is no reason to review the provisions of the plan. This may be the case for a plan that was recently established, but it is always a good idea to review provisions every few years to ensure the plan is still meeting the goals of both the employer and its’ employees. 

Your Restatement Requirements

The IRS requires that all defined contribution prototype and volume submitter plan documents will need to be restated between May 1, 2014, and April 30, 2016. This mandatory restatement period occurs every six years and is required in order for plans to maintain their qualified status with the IRS.

As a result of the Pension Protection Act (PPA), the following are some of the provisions that will be included in your restated plan document:

  • Default investment options
  • Optional automatic enrollment provisions
  • A new optional safe harbor provision available with automatic enrollment
  • Faster vesting
  • Previous pension reform provisions, such as higher contribution limits, catch-up contributions and Roth 401(k)s, that are now permanent

These PPA provisions are already in your defined contribution plan documents; however, they are included as remedial, and not permanent, plan amendments.

An Opportunity to Make Plan Changes

Ever think about changing plan provisions, like adding Roth 401(k) accounts? Loans and hardship withdrawals? In-service distributions? These changes may not have ever justified a separate plan amendment in the past, but you now have to restate your plan(s) anyway. This gives you the opportunity to adjust these plan provisions to better align with your current business objectives while you’re also fulfilling a compliance requirement.

The restatement period is also a great opportunity for those who have been contemplating a move to a safe harbor plan design to help with passing nondiscrimination testing of employee deferrals.

Because you are required to make a full restatement soon, take advantage of the opportunity and implement any plan changes you may have previously considered. Tackling plan changes now will help you avoid fees for plan changes in the future.

Retirement Plan Help

Don’t wait. Now is the time to make your plan more competitive in the marketplace, and better position your business to attract and retain the best employees in your industry. If you need assistance, contact Rea & Associates. Our Ohio pension administration team can help you review your retirement plan to ensure it’s the strongest that it can be.

Author: Paul McEwan, CPA, MT, AIFA (New Philadelphia office)


Want more articles about how to best manage your retirement plan? Check these out:

How Can You Ensure You’re Compliant With Disclosure Review?

Do You Need to Send an Annual Notice to Your 401k Participants?

Can Benchmarking Uncover Money Hiding in Your Retirement Plan?

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