PPA Retirement Plan Document Restatements

Over the next 2 years most 401(k)/Profit Sharing and Money Purchase plan sponsors are facing a mandatory retirement plan document restatement to ensure ongoing compliance.  With the Affordable Care Act turning client attention and interest away from 401(k) conversations over the past few years, the PPA plan document restatement will focus attention and discussions back to the importance of retirement plan design as the next hot topic in the employee benefit plan arena.

Introduction

There have been many changes since the last restatement period, most notably enactment of the Pension Protection Act of 2006 (PPA), which many consider the most sweeping pension reform legislation affecting retirement plans since ERISA.

To be considered “qualified,” retirement plans must contain up-to-date provisions required by the Internal Revenue Service (IRS) and the Department of Labor (DOL) and as a result, all qualified plans must be restated on a cycle determined by the IRS.   For most 401(k)/Profit Sharing and Money Purchase Plans restatement occurs every 6 years.

To remain in compliance, plan sponsors will need to execute a new plan document no later than

April 30, 2016 to incorporate changes for PPA and other legislation.  While that date seems far away, there are many reasons plan sponsors may want to complete the redesign process prior to the end of 2014.  A comprehensive review by a qualified plan consultant can help them make that determination and the changes that are most beneficial for your client.

Plan Design

Over the last few years participant education, fiduciary responsibility and disclosure of fees have been the focus for retirement plans.  As we begin the document restatement process, plan design is expected to move to the top of the list of priorities for plan sponsor consideration. 

We encourage you to join us in contacting clients and prospective clients to make them aware this is a perfect opportunity to review plan design and ensure they are able to maximize retirement savings at the least possible cost.  Remember, without good plan design, employers and their employees may not be able to make contributions at the level needed to achieve their retirement goal.

Your Opportunities

Collaborating with us will give you the leading edge on retirement plan design.  As your clients navigate through this process you will have an opportunity to support them with a dialogue of solutions and benefits including:

  • Plan Design review should be an ongoing process and the required restatement is the best time to incorporate enhancements
  • Changes in ownership structure, profitability or demographics can signal a need for design review to ensure best possible results
  • Plan design can be structured to maximize contributions at the least possible cost
  • Contributions can be targeted to specific individuals and varied on an individual basis to reward certain employees
  • Annual compliance challenges (i.e., “failed” testing that results in contribution refunds and limitations) can be addressed and often “cured”
  • Plans approaching or currently required to have an annual audit may have the opportunity to avoid this costly expense with appropriate plan design
  • Administrative burdens and costs can be significantly reduced

The PPA Restatement provides the chance to problem-solve and enhance retirement savings opportunities with flexible, customized plan design!

We look forward to discussing the possibilities, specifics and exploring ideas on how we can work together to assist clients and prospects with strengthening their retirement plan program.

About Dixon Hughes Goodman LLP: With more than 1,800 people in 12 states, Dixon Hughes Goodman ranks among the nation’s top 20 public accounting firms. Offering comprehensive assurance, tax and advisory services, the firm focuses on major industry lines and serves clients in all 50 states as torwell as internationally. Visit www.dhg.com for additional information.