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Employee Plans Compliance Unit (EPCU) - Completed Projects - Project with Summary Reports – Frozen Plan Amendments

Frozen Plan Amendments Project Overview

The Employee Plans Compliance Unit (EPCU) Frozen Plan Amendments project began in June 2012. We sent contact letters to a sample of plan sponsors that filed Form 5500 series annual returns showing their plans were frozen defined benefit plans; sponsor selected pension feature code 1I. We asked sponsors questions about their plan to learn about frozen defined benefit plans and whether they continue to  timely amend their plan for current law; a qualification requirement.


The responses showed that plan sponsors in the sample are keeping their frozen defined benefit plans updated for current law. When asked for the last date they amended their frozen plan document for current law, sponsors gave us a timely date.

  • Pre-approved plans: Most of the plans were adoptions of pre-approved Master and Prototype (M&P) or Volume Submitter (VS) plans. Sponsors of pre-approved plans had a very specific 2-year window to adopt their EGTRRA plan restatement after Employee Plans Rulings & Agreements approved the lead M&P or VS plan. That period was from April 1, 2010 to April 30, 2012.  Either sponsors of pre-approved plans amended during that window or they didn’t.

  • Individually designed plans: Sponsors of individually designed plans had a different period to amend for EGTRRA. Rather than the 2-year window for pre-approved plans described above, individually designed plans had a variable time to amend for EGTRRA based on the sponsor’s remedial amendment cycle (RAC). In general, the last digit of the sponsor’s employer identification number (EIN) determines the RAC.

The main reasons the plans were frozen were due to financial hardship or adoption of a 401(k) plan. Many sponsors also terminated their frozen defined benefit plan shortly after a freeze, using the freeze as the step prior to termination, while others kept their plans frozen for many years.

A few sponsors didn’t know what they were going to do with their plan in the next few years, but most responded they intended to either terminate their plan or continue to keep their plan frozen. Very few sponsors said they wanted to reactivate their frozen defined benefit plan.


Although frozen plan sponsors may have amended their plan timely, responses showed there were other compliance issues such as:

  • Wrong pension feature code selected.
    1. Some defined contribution plan sponsors incorrectly selected pension feature code 1I, frozen defined benefit plan, on their Form 5500 series return. Pension feature code 1I only applies to defined benefit plans.
    2. Some defined benefit plan sponsors incorrectly selected pension feature code 1I, frozen defined benefit plan, when their plan wasn’t frozen. They simply made a mistake when selecting the plan characteristics.

  • Form 5500 filed incorrectly. Some SEP plan sponsors incorrectly filed a Form 5500 series return for their SEP plan. A Form 5500 series return doesn’t apply to a SEP plan; instead, the entity that maintains the SEP-IRA files a Form 5498, IRA Contribution Information.

  • Form 1099-R not filed. A few frozen plan sponsors that shortly thereafter terminated their plans, didn’t file Forms 1099-R to report the distributions. Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is generally filed for each person to whom a distribution of $10 or more is made.

  • Sponsor didn’t file Form 5500 series return. A few sponsors missed filing their annual return for one or more years while their plan was frozen. Being frozen doesn’t eliminate the Form 5500 series filing requirement.

  • Kept plan frozen despite employer no longer in existence. A few responses indicated the sponsoring employer was no longer in existence but the plan was still frozen. These situations may result in plan qualification problems because a qualified plan needs a sponsoring employer.


The EPCU designed the project to learn whether sponsors are amending their frozen defined benefit plans timely for current law. This information helps Employee Plans have a better understanding of the qualified plan sector and assists with development of tools, guidance and enforcement efforts.

The project goals were to determine:

  1. Whether the plans were actually frozen defined benefit plans,
  2. How long the plans were frozen,
  3. Reasons why the plans were frozen,
  4. What sponsors intended to do with their plans in the short term, and
  5. The last date sponsors amended their plans for current law.

In a frozen plan, no participants will get any new benefit accrual (whether because of service or compensation) except under special circumstances. A frozen plan must continue to meet plan qualification requirements including having the sponsor timely amend it for current law; otherwise, the plan may lose its qualified status for tax benefits.

As long as a qualified retirement plan and related trust are in existence, the sponsor needs to take certain plan administration actions in order to keep the plan qualified. These actions include ensuring that the plan complies with all of the plan qualification requirements of Internal Revenue Code section 401(a) and related Regulations.

These actions are necessary until the sponsor terminates the plan and all trust assets are distributed. The sponsor must file a final Form 5500 series return upon plan termination. This is required even if the sponsor was exempt from filing a Form 5500-EZ in previous years.

Page Last Reviewed or Updated: 13-Apr-2016