Jump to content

PPA Restatement Effective Date


Recommended Posts

That's really a question for your document provider. There was also a thread on this very recently.

I think most providers are saying to restate as of the beginning of the year of restatement, and/but I just saw a Sungard Relius bulletin that recommended doing SH plans as of the beginning of the next year. That means that you have an effective deadline of 12/31/15 for SH plans (which is definitely...silly). The effective date is less important than you might think for PPA compliance purposes, as the PPA stuff is likely buried somewhere with its own effective date(s), as applicable. The question is, when do you want it to be effective...? If you are making any changes to plan provisions, then that will drive your effective date. Otherwise, it doesn't matter much.

Ed Snyder

Link to comment
Share on other sites

Bird - yeah, I agree that the Relius bulletin seemed ridiculous. I thought (and I can't really blame them) that this was just an ultra-conservative CYA corporate position. I think it is easily covered by (for Relius documents with AA format) making certain provisions effective as of the first day of next year in the Appendix. So I wouldn't hesitate to do a restatement before the deadline in 2016, making it effective as of 1/1/2016, other than any "changes" that wouldn't be allowable for a mid-year safe-harbor amendment.

Link to comment
Share on other sites

  • 2 weeks later...

What about an non-calendar year Safe Harbor 401k plan? For example, as July 1 - June 30 plan - could the PPA restatement be done by 4/30/2016 and make if effective 7/1/2016 if we were making any provisional changes that can't be made mid-year, or make it retro to 7/1/15 if there are no changes?

Link to comment
Share on other sites

I think I would make the restatement effective 7/1/15, and make the particular provisions you want to change effective 7/1/16. The PPA provisions that have to be effective on certain dates are probably buried somewhere with those effective dates, but I'd feel better if the general restatement date were before 4/30/16. Although I think the IRS just says it must be adopted by 4/30/16...so maybe that works.

(Just thinking out loud here...what about the new position that you can't use forfeitures to fund a SH contribution? I don't think that has a required effective date other than the fact that it must be included in a PPA document. Could you restate a plan on 4/30/16 and say it is effective 7/1/16...7/1/17? That's definitely not the intent but so far I only see that the signing date must be on or before 4/30/16.)

Ed Snyder

Link to comment
Share on other sites

The timing of the SH forfeiture issue change will depend on the document language. Our PPA VS document says:

Effective with the adoption of this Plan, if the Plan is a Safe Harbor 401(k) Plan, the Employer may not use forfeitures to reduce the Safe Harbor Employer Contribution or Safe Harbor Matching Contribution under the Plan (as defined under Section 6.04(a)(1)), unless provided otherwise under IRS guidance. ..

As for adopting by 4/30/2016, but making it effective after 4/30/2016, I think that would take you out of the 6 year pre-approved document restatement cycle for the upcoming cycle. To qualify as a "prior adopter" for the next cycle, your pre-approved document must be both adopted and effective by 4/30/2016. From Rev. Proc. 2007-44, Section 17.02:

.02 An employer is a prior adopter if:
(1) the employer adopted and made effective a pre-approved plan as of the last day of the six-year remedial amendment cycle immediately preceding the opening of the current six-year cycle and that employer's pre-approved plan was an existing plan, or an interim pre-approved plan (under section 17.01(3)(b)(ii)) that has a valid opinion or advisory letter for the period preceding the opening of the current six-year cycle, and
(2) the employer, within the announced adoption period described in sections 16.03 and 16.04,
(a) adopts the newly approved version of that pre-approved plan or

(b) adopts the newly approved version of a different pre-approved plan maintained by either the same sponsor or a different sponsor.

If you have a pre-approved document, but don't meet the requirements to be a "prior adopter" for the following cycle, I don't see any way for you to qualify for the next 6 year restatement cycle under Section 17.

Link to comment
Share on other sites

As for adopting by 4/30/2016, but making it effective after 4/30/2016, I think that would take you out of the 6 year pre-approved document restatement cycle for the upcoming cycle. To qualify as a "prior adopter" for the next cycle, your pre-approved document must be both adopted and effective by 4/30/2016. From Rev. Proc. 2007-44, Section 17.02:

Thanks. Whatever I was looking at only said "adopted by 4/30/16", or more likely, I just didn't see it.

Ed Snyder

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...