In case you have not heard, it is time yet again to amend and restate your retirement plan for recent pension legislation in order to retain the tax qualified status of your retirement plan. The periodic amendment and restatement of your retirement plan is a necessary evil that is required by the Internal Revenue Service approximately once every 6 years in order to retain the tax qualified status of your plan. This time the legislation goes back to 2006 with the Pension Protection Act of 2006 (“PPA”). Subsequent thereto, two other acts of substance that were enacted via separate legislative acts were the Worker, Retiree and Employer Recovery Act of 2008 (“WRERA”) and the Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”).
Failure to timely amend and restate your retirement plan for the above referenced acts on or before April 30, 2016 can potentially result in your retirement plan being disqualified.
No one wants their retirement plan to be disqualified as the tax consequences associated therewith as to both the employer and the employer’s employees are disastrous (disallowance of deductions as to the employer and immediate income taxation as to benefits of each employee).
If you have not already been contacted by your Plan attorney and/or document provider, you will be shortly as to the upcoming amendment deadline and the process in which your retirement plan will be amended prior thereto. In subsequent articles, I will go over these upcoming changes that are required by law to be officially made to your plan on or before April 30, 2016.
Dave Graf is a Partner in the Friday, Eldredge & Clark, LLP law firm in Little Rock. To submit a question, please contact Janet Borders at [email protected].