Keeping Your Plan Documents Up to Date

Discretionary Plan Amendments

If you want to change the features of the retirement plan you offer to your employees, or have already implemented changes this year, be sure to amend your plan documents to reflect your choices by December 31 (for calendar-year plans). 

Over time, you may find that your plan features need to be adjusted as your employee demographics and business objectives change. Some employers modify their matching contribution to encourage their employees to save more for retirement. Others relax the eligibility requirements to allow more employees to enter the plan earlier.   

To make these types of discretionary plan design changes, you must amend your plan documents. Depending on the type of change you want to make, you may be able to implement the change during the plan year so long as you execute a plan amendment by the last day of the plan year in which the change occurred. For example, if you allowed Roth contributions or plan loans for the first time in 2018, your plan documents must be amended to reflect those features by December 31, 2018. Some types of changes, however, require a plan amendment and notice to participants before the effective date of the change. For example, if you want to add a safe harbor feature to an existing 401(k) plan, the safe harbor feature generally cannot be effective until the beginning of the next plan year and the plan must be amended by the end of the prior plan year. 

Required Plan Amendments 

When the laws affecting retirement plans change, you must amend your plan documents to incorporate these changes to maintain the plan’s qualified status. These required amendments are sometimes referred to as “interim amendments.” The IRS will generally establish a deadline by which interim amendments must be adopted. These amendments keep your plan documents current for law changes between document restatement periods. For pre-approved defined contribution plans, restatement occurs every six years, when document providers will re-write plan documents to incorporate interim amendments that have been required during the cycle and any new rule changes. Pre-approved defined contribution plans subject to this restatement requirement include profit sharing plans and 401(k) plans that are established using plan documents that have been submitted to the IRS for approval by the plan document provider. Pre-approved plans were last required to be restated by April 30, 2016. 

Newport Group Solution: If you have any questions about plan document amendments that apply to your plan or want to explore changes in your plan’s features, contact your Newport Group Representative

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Newport Group and its affiliates do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before making any decisions.

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