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Must an individual-designed-plan be restated if compliant?


kmhaab

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Must an individually designed profit sharing and 401(k) plan be restated according to the 5 year cycle, if there are no amendments needed? 

The plan was amended and restated in 2010 and incorporated all of the required PPA, Heart, EGGTRA, etc. amendments.  It's already compliant with Windsor and upon a quick review of the cumulative list of changes in qualification requirements it appears to be compliant. However, under the rules re: the remedial cycle in effect at the time the plan should have been restated in 2015 and the plan should have filed for a determination letter.

My interpretation is that the only error was a failure to apply for a determination letter in 2015.  Is this considered a "nonamender" failure if there are no amendments that were failed to be adopted?  Does the plan need to correct through VCP, or simply file for a determination letter at this time?

Any guidance would be appreciated.

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I've heard some practitioners suggest not restating a plan if doing so might make it more difficult to show that the plan remains the same as what obtained the most recent determination letter.

Others hate the distraction and inconvenience of piecing together a plan from more than one document.

If you found no amendment is needed, doesn't that mean there is no document failure to correct?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Thank you for your response. Yes, I would think that if no amendment is needed, there is no document failure to correct. But I am unsure how to reconcile this with the requirement that the plan be restated every 5 years. Do they still need to restate the plan on the 5 year cycle if there have been no amendments?  They wouldn't actually be restating anything, just updating the date of the restatement on the plan document. What about the determination letter?  The prior favorable letter expired on 1/31/2016, but there have been no changes to the plan and I believe the plan is in compliance with all required qualification changes since the last restatement. 

Do they need a new determination letter and if so can that be done retroactively to 2/1/2016?

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If one does not apply for the Internal Revenue Service's written determination, is there any Internal Revenue Code rule that requires restatement of a plan?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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  • david rigby changed the title to Must an individual-designed-plan be restated if compliant?
On ‎3‎/‎22‎/‎2017 at 0:38 PM, kmhaab said:

... the requirement that the plan be restated every 5 years.

Is this required?  Is it related to the expectation that the sponsor will be filing for a new D-letter every five years?  If so, and there is no new 5-year filing, what is the point of restatement?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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