Is Your 401(k) Plan Missing Required Amendments?
One of the requirements for all 401(k) plans is that there must be a formal written document that complies with the Internal Revenue Code (IRC). Whenever there are changes to the IRC that affect 401(k) plans, all 401(k) plan documents must be amended to reflect the change in the IRC. Plans that are not timely updated will no longer be considered qualified plans subject to favorable tax treatment under the IRC.
The easiest way to determine which amendment(s) your plan is missing is to check the Cumulative List of Changes, which is published by the IRS. The most current Cumulative List is in Notice 2011-97. View List »
You should also consider contacting a qualified ERISA attorney to review your plan document to ensure your plan is up to date and in compliance with the most current amendments.
If you find that your plan has missing amendments, you can do the following to correct the problem:
- Adopt the missing amendments. The effective date of each amendment should be retroactive back to the date the amendment was supposed to be adopted.
- Adopt a pre-approved plan document.
- File with the Voluntary Correction Program by using Revenue Procedure 2008-50.
View Summary »
As a plan sponsor, you have many fiduciary responsibilities, one of which is to keep the plan current with the IRC. Keeping your plan current is one way to demonstrate that you are meeting your fiduciary responsibility to the plan’s participants.
More information on this topic can be found in the 401(k) Plan Fix-It Guide on the IRS website. View Summary »
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