Monday, Monday: Deadline for Adopting Pre-approved Retirement Plans Bumped to May 1


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Employers might not have to burn the midnight oil the weekend of April 28-30 to meet the deadline for adopting a pre-approved defined contribution plan.

That was a distinct possibility until this week, when the Internal Revenue Service announced that employers would have an extra 24 hours—until Monday, May 1—to adopt their pre-approved plans.

A pre-approved plan is a plan provided by a financial institution or other entity that contains plan provisions already approved by the IRS. The employer adopts the plan, including plan changes provided by the IRS in Lists of Required Modifications. The employer can then tailor the plan to meet its specific needs based on various options involving participation, vesting, benefit levels and funding.

Originally, employers had until April 30, 2016, to adopt pre-approved defined contribution plans based on the agency’s 2010 cumulative list of changes. However, in Notice 2016-3, the IRS extended the deadline until April 30, 2017. The IRS said it did so “to facilitate a plan sponsor’s ability to convert an existing individually designed plan into a current defined contribution pre-approved plan” based on the 2010 list.

Employers are eligible for the extended May 1, 2017, deadline if they adopt a plan after Jan. 1, 2016, provided that plan isn’t a modification and restatement of a defined contribution pre-approved plan maintained by the employer before Jan. 1, 2016.

The extension gives employers until May 1, 2017, to adopt a current defined contribution pre-approved plan and, if permissible, to apply for a determination letter.

Employers qualifying for an extension should include a statement in their cover letter with their submission package that the package restates the plan as a current defined contribution pre-approved plan and qualifies for the Notice 2016-3 extension, the IRS said.

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