PPA Restatement:

Q-1:       What is the PPA Restatement?

A-1:        In recent years, Congress has enacted a number of new laws affecting tax qualified retirement plans.  The most important of these new laws are the Pension Protection Act of 2006 (PPA) the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act) and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA).  In addition, the IRS has issued substantial guidance regarding the operation of qualified plans.  Congress and the IRS have generally permitted employers to comply with these new rules in operation without formally amending the underlying Plan document until some date after the law is effective. The IRS is now requiring all qualified plans to be restated to comply in form with the new laws and guidance.  The PPA restatement takes all of these laws into account into one pre-approved document.

Q-2:       We just adopted our Plan last year. Why do we need to restate the document so soon after adoption?

A-2:        The IRS requires all Plans be restated onto an “IRS-approved” version of the pre-approved Plan. All plans must be restated onto an IRS-approved version no later than April 30th, 2016.

Q-3:       How is the new plan document different than our current document?

A-3:        The new document has been updated for new laws and IRS guidance, including:

  • Required amendments to comply with PPA.
  • New rules providing certain benefits to employees on military leave, as required by the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act).
  • New rules allowing non-spousal beneficiaries to rollover a distribution to an inherited IRA.
  • New provisions dealing with the ability to make automatic contributions under the Plan.
  • New rules allowing participants to convert amounts from a pre-tax source to an after-tax Roth contribution source.
  • Final regulations addressing the maximum amount that may be contributed to the Plan under Code §415.

Q-4:       What documents do we need to sign in order to restate our Plan document?

A-4:        We have provided the following updated Plan-related documents:

  • Sample Resolution
  • Restated Adoption Agreement
  • Basic Plan Document
  • Favorable IRS letter
  • Summary Plan Description

Q-5:       Who must sign the sample resolution to adopt the Plan restatement?

A-5:        The purpose of the resolution is to authorize your company to take the actions necessary to restate the plan.  The resolution provided in the plan document package is designed to satisfy the state law requirements to authorize a company to adopt a qualified retirement plan. The resolution requires unanimous written consent.  You should consult with your legal advisor if you would prefer to use an alternate document to authorize adoption of the Plan restatement.

Q-6:       What pages of the Adoption Agreement must be signed? Do we need to return a copy of the signed Adoption Agreement to you?

A-6:        The pages that must be signed will depend on how the Plan is completed. The following describes each of the Adoption Agreement pages that may require a signature:

-Employer Signature Page. The Employer Signature Page must be signed by an authorized representative of the Employer. A signature is required to implement the provisions under the restated Plan document.

-Trustee Declaration Page. Generally, the Trustee Declaration Page must be signed by the Trustee indicating its acceptance of the fiduciary responsibilities under the Plan. No signature is required if the Plan is using a separate trust agreement that has been approved by the IRS.

-Participating Employer Signature Page. If there is more than one employer that has adopted the Plan or is maintaining the Plan, each employer must execute the Plan document.

-Interim Amendment #1. If the Plan is a 401(k) plan, it may include an Interim Amendment #1 implementing the provisions under the Americans Taxpayer Relief Act of 2013 (ATRA) dealing with conversions of pre-tax contributions to Roth contributions under the Plan. You only need to complete and sign the Interim Amendment #1 if you are implementing the In-Plan Roth Conversion provisions.

Q-7:       Do we need to file our plan with the IRS?

A-7:        Generally, you may rely upon the IRS favorable letter issued to the Plan sponsor in lieu of an individual determination letter.  The Pension Studio has a copy of this letter for your records that will be provided with the document package.

Q-8:       Does a new Summary Plan Description (SPD) need to be provided to each participant?

A-8:        Yes, the Department of Labor (DOL) requires participants be informed of any material changes made to the plan document. The DOL also requires periodic restatements of the SPD.  The adoption of the PPA restated document is an appropriate time to provide a new SPD. All current participants and beneficiaries receiving benefits must receive a new SPD no later than 210 days (approximately 7 months) after the close of the plan year for which the SPD is updated.