Defined Contribution Plans Must Be Rewritten Now
Employers with a pre-approved defined contribution plan (e.g., 401(k) and profit-sharing) have a two-year time period to rewrite their plan documents. That period started August 1, 2020, and ends July 31, 2022.
The window to rewrite pre-approved plans typically opens every six years. While rewriting the retirement plan is required, this timeframe presents an excellent opportunity for plan sponsors, including both existing clients and other employers, to talk with Warner about how their defined contribution plan is working for them and their workforce, to discuss trends in defined contribution plan design and governance, and to review best practices for avoiding future compliance issues and fiduciary risks.
Warner’s Employee Benefits/Executive Compensation Practice Group maintains a pre-approved document for our clients.
Advantages of Warner’s Pre-Approved Document
We know plan sponsors have a myriad of options for obtaining pre-approved retirement plan documents. But, Warner’s defined contribution plan document was created collaboratively, using a compliance-focused drafting process, and includes the flexibility that comes from the thousands of options already pre-approved by the IRS. In addition, we craft provisions providing maximum protections for plan sponsors and fiduciaries, based on careful attention to increased retirement plan litigation around the country. This careful drafting process and flexible plan design is what distinguishes Warner’s document from others in the retirement plan marketplace.
Less costly plans often are automatically computer-generated or prepared by someone with limited retirement plan expertise – someone whose primary job is to protect the plan document provider or sell new plan features. These individuals generally don’t make design recommendations or provide advice in your best interests – only lawyers can provide legal advice.
We gather information from each client and craft a rewritten plan that is specifically tailored to that client’s unique needs, while also satisfying applicable legal requirements. The customized documents we prepare are developed by highly-trained legal professionals whose sole focus is retirement plans and their clients’ best interests.
For more information on the advantages of Warner’s pre‑approved plan document, click here.
You Can Apply For an IRS Determination Letter
A defined contribution plan rewritten using Warner’s pre-approved document generally will be eligible to apply to the IRS for an individual determination letter regarding the plan’s ongoing tax-qualified status. The ability to apply for and get an IRS favorable determination letter has become increasingly valuable as the IRS has significantly limited this opportunity for plan sponsors of individually designed plans.
Billing Options
Warner understands that clients are more cost conscious than ever, particularly right now during the COVID-19 pandemic. To that end, Warner is open to completing this project on an alternative fee basis. If you are interested in exploring this opportunity, just let us know.
Fees Payable From Plan Assets
The IRS determination letter filing fee for a rewritten plan on Warner’s pre-approved plan document is $1,000. The IRS filing fee is eligible for payment or reimbursement using plan assets.
Some, or possibly all, of our fees associated with the plan restatement may be eligible as well.
Next Steps
If your defined contribution plan already uses the Warner pre-approved plan document, we will contact you directly about your plan’s required rewrite and IRS determination letter submission.
If you sponsor a defined contribution plan that does not use the Warner pre-approved plan document and need legal review of your plan restatement or would like to discuss converting to Warner’s document, please contact a retirement plan member of Warner’s Employee Benefits/Executive Compensation Practice Group.
