By: David I. Gensler, MSPA, MAAA, EA, AIF®
In 2006, Congress passed the Pension Protection Act of 2006 (PPA). As a result, every defined contribution plan, other than 403(b) plans, must be completely restated, so that they comply with PPA. The “drop dead” date to sign and date the restated plan is April 30, 2016. So if you sponsor a 401(k) plan, a profit-sharing plan or any other sort of a defined contribution plan, the plan must be restated, signed and dated by that date. If your plan gets audited by the IRS, the very first thing that they will ask you for is a copy of the plan document. That is not the time to be wondering if you ever updated your plan or not.
There are basically three types of plans that a plan sponsor could adopt:
A Prototype Plan – This type of plan contains two elements: an adoption agreement and a separate trust document. Many of you are familiar with the adoption agreement, which generally contains various choices for eligibility, vesting, whether the plan will be a safe harbor plan or not, etc. You choose which provisions that your particular plan wants to operate under by checking the appropriate box in that section of the document. The IRS has pre-approved all of the various options, so you cannot pick anything that would be in conflict with the law.