The Canada Revenue Agency’s (CRA) Registered Plans Directorate (RPD) recently made two announcements that plan sponsors and administrators should be aware of: (i) a project to assess the compliance of DB plans; and (ii) a clarification of the requirements for applications to register a pension plan.
Project to Assess Compliance of DB Plans
The RPD announced that it will be will be conducting a project to validate its “risk criteria” for registered pension plans (RPP).
While a previous review, in 2012, focused on defined contribution plans, the current project will focus on defined benefit (DB) plans.
In the coming months, the RPD will review all of the documents for a sample of DB pension plans to determine whether they comply with the requirements of the Income Tax Act (ITA) and Regulations and what types of non-compliance are most common. If the plan documents do not comply with the ITA and Regulations, the RPD has indicated that it will work with the plan administrator “to find the best way to bring the plan into compliance”.
Applications for Registering Pension Plans
On October 11, 2013, the RPD posted a Newsletter reaffirming that it will not accept incomplete applications for RPPs. The Newsletter lists the following documents as being required for an application to be considered complete:
- an application form (i.e., Form T510 – Application to Register a Pension Plan, signed by the plan administrator);
- certified copies of the plan text;
- certified copies of the funding documents;
- certified copies of any agreements relating to the plan; and
- certified copies of all resolutions and by-laws relating to the plan.
The Newsletter specifies what constitutes an “acceptable certified copy” (i.e., a signed original document or a copy that contains an original signature or initials from the plan administrator, or the company seal, certifying that the document is a true copy of the original). However, the Newsletter goes on to note that since May 2, 2005, the CRA has been accepting photocopies of the signed documents listed above, but if photocopies are submitted, plan administrators must provide the original documents to the CRA upon request.
While applications containing all the required documents will be deemed registered within 60 days, the application for registration will still be reviewed to ensure that the plan text complies with the requirements of the ITA and the Regulations.