Deadline to Adopt Restated Pre-Approved DC Plans


April 30, 2016, is the deadline for employers using pre-approved retirement plan documents to sign an updated version of their 401(k), profit-sharing or other defined contribution retirement plans.

April 30, 2017, is the extended deadline for any defined contribution pre-approved plan adopted on or after January 1, 2016, other than a plan that is adopted as a modification and restatement of a defined contribution pre-approved plan that had been maintained by the employer prior to January 1, 2016. This extension is to facilitate a plan sponsor’s ability to convert an existing individually designed plan into a current defined contribution pre-approved plan. See Notice 2016-3.

Pre-approved plans are purchased from a financial institution, advisor, or similar provider. They allow limited customization but give the employer the reassurance that IRS approved the plan’s wording.

Why a revised plan is necessary

Retirement plan documents must be revised when the law changes. Your retirement plan will remain qualified and provide tax benefits only if you update your plan document for law changes by the required deadline.

Document providers who sell pre-approved plans update the plan in its entirety once every six years and request a new opinion/advisory letter from the IRS. The IRS generally approves all updated defined contribution plans at the same time. Most opinion/advisory letters for the latest round of pre-approved defined contribution plans were issued on March 31, 2014. Employers have two years, until April 30, 2016, to adopt these updated plans (Announcement 2014-16).

After April 30, 2016, if you haven’t adopted a restated plan, your plan does not comply with the tax laws and may be ineligible for tax benefits.

Adopting a revised plan document

Your provider should have sent you a revised plan document, approved by the IRS, which complies with the Pension Protection Act of 2006 (PPA) and other law changes listed on the 2010 Cumulative List of Changes in Retirement Plan Qualification Requirements (Notice 2010-90). Sometimes a plan reflecting PPA is called a “PPA restatement.”

Even if you made amendments to your plan to reflect these laws as they became effective (interim amendments), you are still required to adopt a PPA plan document.

Determination letters for employers adopting a pre-approved plan 

Most employers don't need to apply for a separate IRS determination letter for a pre-approved plan. They can rely on the IRS opinion or advisory letter issued to the pre-approved plan.  Employers who modified their Volume Submitter (VS) plans can apply for individual determination letters for pre-approved defined contribution plans but must do so by April 30, 2016. Plans eligible for the April 30, 2017 extended deadline (see above) also have an extension until April 30, 2017, to apply for a determination letter, if permissible.

M&P plans - An employer who adopts a master & prototype plan (standardized or non-standardized) may not apply for its own determination letter on Form 5307. Instead, the employer should rely on the approval letter issued to the plan sponsor. If the modifications are extensive, causing the plan to be treated as an individually designed plan, the employer may, if eligible, file Form 5300, Application for Determination for Employee Benefit Plan.

VS plans - An adopting employer who made limited modifications to its volume submitter plan may apply for a determination letter on Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plans (instructions). If the modifications are extensive, causing the plan to be treated as an individually designed plan, the employer must instead file Form 5300, Application for Determination for Employee Benefit Plan.

See Revenue Procedure 2019-4 for more information on determination letter applications for employers using pre-approved plan documents.

Note that Revenue Procedure 2016-37, limits when individually designed plans are permitted to submit a determination letter application (effective January 1, 2017).

Additional resources