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Old School
Back in the mid-1970s, Schoolhouse Rock used to air during the commercial breaks of Saturday morning cartoons. Whether it was multiplication tables or grammar or Columbus' discovery of America, anyone who was a kid during that era can probably still sing along word-for-word.
What does this have to do with 401(k) plans? Well, one of the most popular installments describes how a bill becomes a law. What "I'm Just A Bill" doesn't mention is what a plan sponsor must do when that law includes changes to retirement plan rules.
Plan Documents
In short, plan sponsors must amend their plan documents so that provisions are consistent with the new laws and regulations. So that we are not continually re-writing plan documents, the IRS allows plans to adopt "snap-on" amendments that summarize the changes; however, every 5 to 6 years, plans must be fully restated to incorporate the full, detailed language. A list of required amendments and restatements dating back to 2003 is available here.
Here We Go Again
Last week, the IRS announced that the next round of mandatory plan document restatements (for the Pension Protection Act and other laws) will start on May 1, 2014 and run through April 30, 2016. Now that the official word is out, plan document software providers will be updating their systems so that we can begin preparing restated plan documents in late June or early July.
DWC has already begun preparations to make the restatement process as efficient and cost-effective as possible. We have drafted letters to our clients, providing additional details and answering common questions and will be sending them out in the very near future.
What's Next
Although we cannot yet actually produce the new documents, we will begin reviewing existing plan documents and discussing potential plan design changes immediately. That will allow us to move forward as soon as the software providers complete their updates.
Just like the procedures for passing new laws, the rules related to mandatory plan restatements are not always intuitive and are bound to cause questions. We have created a special e-mail address just for this purpose - Restatement@DWCconsultants.com. Not sure whether your plan is subject to this requirement? Send us a note. Missing one of the previous snap-on amendments? Let us know, and we can help you correct it.
If You're Feeling Nostalgic
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