Several years ago the Internal Revenue Service adopted a five-year restatement cycle to amend and replace qualified retirement plan documents into a "restated plan" incorporating all previous amendments since the last restatement. Individually designed plans and governmental plans were subject to specific one-year cycles ending January 31 of years 2007 through 2011. However, IRS pre-approved form documents qualified as prototype or volume submitter plans marketed by mutual funds, insurance companies, banks, law firms and third-party administrators fall under a special restatement cycle which, for the 2001 legislation known as EGTRRA, ends April 30, 2010.

Accordingly, if you are operating under a prototype or volume submitter plan sponsored by Leonard, Street and Deinard, a bank, brokerage firm, insurance company or third-party administrator, you should complete this restatement of your plan between April 2008 and April 30, 2010. If you fail to complete and execute this restatement by the April 30, 2010, deadline, the plan will lose its tax qualified status and all asset accumulations may become taxable unless the plan sponsor enters the Employee Plans Compliance Resolution System (EPCRS) for late amenders and pays the stipulated penalties under that program, which can reach into the tens of thousands of dollars.

Action May Be Required

If you have not completed the amendment and restatement of your IRS pre-approved plan, you should contact your document provider immediately to arrange for an updated plan document. If your plan utilizes a "non-approved trust" (a trust that is not pre-approved by the IRS for use with the pre-approved plan), in order to have assurance of ongoing plan tax qualification, you will need to submit the plan to the IRS for a determination letter on or before the April 30, 2010, deadline. In order to accomplish all these actions (including obtaining board of directors approval) on a timely basis, you must act now.

The cycle for individually designed plans (including all ESOPS and many defined benefit plans) is determined based upon the last digit of the sponsoring employer’s federal identification number. Plan sponsors with EINs ending in 0 or 5 fall into Cycle E, which requires a restated plan and IRS submission on or before January 31, 2011.