PPA Restatement for most IRS 401(a) Profit Sharing and 401(k) Plans

By J. Saunders Wiggins, CFP®, AIF®

J. Saunders Wiggins, CFP®, AIF®

J. Saunders Wiggins, CFP®, AIF® CEO/President

In 2014, the IRS is expected to issue approval for the pre-approved 401(a) and 401(k) plan documents that have been updated to comply with tax law changes since the previous restatement mandated by the IRS.

This will impact all employers that have adopted a pre-approved defined contribution plan. The specific types of plans impacted are 401(a) plans (profit sharing and money purchase) and 401(k) plans. Employers are expected to have about two years to adopt a restated plan document after the date the IRS issues approval of plan documents. Under the pre-approval program (the DC Program) the IRS established a six year restatement cycle for pre-approved plans. The prior six year cycle was referred to as the EGTRRA restatement cycle and the current six year cycle is referred to as the PPA restatement cycle.

IRSThe current restatement cycle begins in May 2014 and is expected to conclude in April 2016. In addition to fulfilling the IRS requirement, this is the perfect time to explore how various plan provisions can be structured to meet a company's unique goals beyond simply providing a savings vehicle for employees. Many service providers will most likely offer a pre-packaged, off-the-shelf replacement document without tailoring plan provisions to each company's specific objectives.

However, when such a complete revision is mandated, it presents a perfect opportunity for businesses to incorporate desired changes and plan improvements. Possible opportunities may include:

  • Greater tax benefits for business owners and executives
  • Increased plan participation
  • Improved plan administration

ACG offers the complete spectrum of retirement plan services including document compliance, plan design, plan administration, tax reporting, and investment advisory services. We have over 30 years of experience serving the retirement plan market, and our approach is to tailor the required document revision to meet the specific and beneficial objectives of our clients.

— Topics: 401(k), Retirement