All Defined Contribution plan documents (including 401(k), Profit Sharing, and Money Purchase Plans) were required to be restated by no later than April 30, 2016 to incorporate the language and provisions from the Pension Protection Act of 2006 (PPA), and various other required amendments that took effect between 2007 and 2011.
If you missed the PPA restatement deadline & failed to update your 401(k) plan document, you can still update it – better late than never! And if you update it by April 30, 2017, then there are discounted penalties from IRS. Under the IRS Voluntary Correction Program (VCP), submissions require the payment of a fee to IRS based on the chart below. For a retirement plan document update processed on or before April 30, 2017, 50% of the applicable fee applies.
|
Number of eligible participants |
Regular VCP filing fee |
50% fee if submitted by 4/30/17 |
|
20 or fewer |
$500 |
$250 |
|
21-50 |
$750 |
$375 |
|
51-100 |
$1,500 |
$750 |
|
101-1,000 |
$5,000 |
$2,500 |
|
1,001-10,000 |
$10,000 |
$5,000 |
|
10,000 or more |
$15,000 |
$7,500 |
Failure to have an updated PPA document can result in disqualification of the plan and/or significant penalties. Even if you terminate your plan, it must be updated for current law prior to the termination.
Whether you have a plan that covers just yourself, or a plan with hundreds of participants, it is important to update your plan document for current laws. It can cost thousands of dollars if it is discovered under audit that your plan is not compliant with the regulations.
Let BRI help! We can help get your plan updated onto our pre-approved PPA document. We can also help with a VCP submission to the IRS if needed. We have helped companies all over the country with their compliance and document needs. Contact us today – we look forward to helping you too.
Want more information? Here's the intro to our previous blog on PPA Restatement Deadline:
Why does our Plan need to be Restated?
Approximately every six years, the IRS requires that plan documents be updated and resubmitted for review and approval. Benefit Resources has received approval on its updated master document, and now we are ready to assist our clients in meeting the restatement requirement to insure that your plan continues to maintain its tax-exempt status.
This updated PPA document should be kept along with fully executed copies of all Plan documents, amendments and restatements since the inception of the plan. If your plan is audited by the IRS or Department of Labor (DOL), they will ask to see signed plan documents and will review to make sure they are up to date for all required remedial amendments.
What is PPA?
This “PPA Restatement” is named after the 2006 legislation passed by congress. Some highlights of Pension Protection Act of 2006 as it relates to retirement plans includes:
Image courtesy of Stuart Miles / FreeDigitalPhotos.net
