4 Amendments Equal a Restatement

How often should a plan document be restated? Not an easy question to answer because it can be more often than waiting for the mandatory restatements periodically required by the IRS. A little remembered section of Revenue Procedure 2007-6 requires that plan documents are restated after 4 amendments. The exact language of Section 7.04 is:

.04 In general, individually designed plans must be restated when they are submitted for determination letter applications for the initial remedial amendment cycle (that is, EGTRRA remedial amendment period) and subsequent remedial amendment cycles. For this purpose, submission of a working copy of the plan in a restated format will suffice.

A restated plan is required to be submitted if four or more amendments (excluding amendments making only non-substantive changes) have been made since the last restated plan was submitted. In addition, the Service may require restatement of a plan or submission of a working copy of the plan in a restated format when considered necessary. Where a working copy is submitted with executed amendments integrated into the working copy, all such amendments must also be separately submitted. For example, restatement may be required when there have been major changes in law. A restated plan or a working copy of the plan in a restated format must be submitted for a plan that has not previously received a determination letter that takes into account all requirements of EGTRRA.

So how many amendments can a plan have before it is restated? The answer depends on whether the amendments are non-substantive or not. The IRS has not defined what a non-substantive change is. A common rule is not to count the required mandatory tack-on amendments in the total number of amendments. For example, currently a 401(k) plan using a GUST document is required to have 4 mandatory tack-on amendments – amendments for EGTRRA, Required Minimum Distribution, Automatic Rollover, and Final 401(k) Regulations. These 4 mandatory tack-on amendments would be considered non-substantive as far as counting the number of amendments a plan can have before being required to restate, and so a plan could have these 4 amendments, along with another 4 amendments making substantive changes, before the plan would be required to restate.

[tags]Pension Protection Act, ppa, pension, retirement, determination letter, rev proc 2007-6, amendment, restatement, ERISA[/tags]

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