Jump to content

FIS/Relius IDP VS document users and adding Roth for 2024


Rai123

Recommended Posts

I posted a similar question not too long ago but I'm really reaching out to anyone that uses the same document provider and type of documents we use. Which are the FIS/Relius pre-approved IDP Plan documents.  We are trying to determine if there's an easy way to amend our plans that don't currently allow Roth Deferrals to allow them to comply with the Secure Act Roth catch-up provision for 2024. 

It seems there is no way to amend a FIS/Relius IDP to add Roth 401k deferrals, without losing reliance. We are trying to avoid restating since we recently restated all plans for Cycle 3. 

If you use these types of documents, are you restating the plan documents now to add Roth deferrals?

 

 

Link to comment
Share on other sites

I don’t know the tax law about remedial-amendment periods, but many BenefitsLink commenters do. Perhaps they’ll weigh in on my related question:

If a plan’s sponsor is adding a provision for Roth deferrals because it’s needed to help meet SECURE 2022’s new tax-qualification condition that § 414(v) deferrals be Roth deferrals, is the provision sufficiently related that it gets a SECURE 2022 remedial-amendment period?

If so, does the tax-qualification regime tolerate operate now, amend later?

Or does that not work?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

Link to comment
Share on other sites

We will need guidance from the IRS to say for sure, but my take on this is that adding Roth for purposes of complying with S2 sec. 603 isn't a remedial amendment issue, and so wouldn't qualify for the extended deadline. All the law says is that employees whose FICA wages in the prior year were more than a certain dollar amount may not make a catch-up contribution in the current year unless that contribution is Roth. A plan could just as well comply with this requirement by not allowing those employees to make catch-up contributions at all. Of course, due to the universal availability requirement that applies to catch-ups, the employer would have a qualification issue unless they eliminated catch-ups for all participants. But still, adding Roth is not a requirement to comply with the law.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

Link to comment
Share on other sites

I haven't seen the FIS/Relius IDP VS document.  It is surprising that Roth language is not part of the base package.  Adding a Roth feature to a plan that does not already have all of the various Roth provisions would be a major effort (e.g., Roth conversions, sequencing of distribution or loan sources, sequencing of test refunds...)

I agree with CB Zeller that adding Roth is not a remedial issue since Roth is an optional feature.  Note, too, that apart from SECURE 2.0, Roth contributions currently can only begin after the effective date on or after the date of the adoption of the Roth feature for the feature.

The answer/path of least resistance for you likely will be to restate now onto a document that has the Roth language.

Link to comment
Share on other sites

We not longer use the FIS VS - but when we did, I had a conversion with one of their Legal Staff. Best to restate to add Roth, as Roth impact language throughout the document. As with all document providers, there is no amendment yet for SECURE 2.0 - at least, not that I am aware of any.

Adding Roth would be a discretionary Amendment. Why not wait until later in 2023 and maybe, we will have SECURE 2.0 language - as a tack on Amendment.

 

Link to comment
Share on other sites

Paul I and msmith point out the reasons why adding Roth to an IDP formatted VS plan via a short amendment is difficult. While not impossible, I'd say that it would be less expensive to restate the plan than to create an amendment that modifies a large number of sections of the document. As far as the impact on reliance, I wouldn't worry because it would just need to be a good-faith amendment. When the plan is restated for the next cycle you get retroactive protection. But again, much less expense to restate the plan. 

As to whether an amendment to add Roth is needed now, that is definitely the safe way to go. In the past, the IRS has provided that even discretionary provisions of a law are integrally related to a change in the qualification requirements. I would expect the IRS to do that here - lots of new discretionary options. No telling if that would be broad enough to  cover the addition of the underlying Roth provision. But as Paul pointed out on the sequencing, etc., restating the plan to address those issues now might be worthwhile, even if the IRS does provide for broad retroactive amendment relief. 

Link to comment
Share on other sites

Excellent article about "Industry Concerns re Roth Catch-ups" in June 23 PlanSponsor.  The "industry groups" are asking for Congressional action on this but our specialists are indicating that, since this is a revenue issue for Congress, they (industry groups) may not get any delay.

We (FuturePlan 401(k) and 403(b)) also use Relius.  I know there is a comprehensive amendment (for SECURE 2.0 issues) coming but do not have a date.  The mechanics involved in administering this provision do involve more than the language in the plan document. There are also payroll concerns, etc.

Not very specific but hope this helps!

Patricia Neal Jensen, JD,VP

403(b) SME FuturePlan

 

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

Link to comment
Share on other sites

I don't use the FIS/IDP but in the pre-approved doc, which we do use, you could use the short amendment system to check the box to allow ROTH and enter the effective date.

Have you tried asking FIS document language support? I've found their ticket system isn't as good as it used to be but they still do respond.

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...