3 Tips for Restating Your Retirement Plan

Is your retirement plan ready for the next restatement deadline? Every six years, the Internal Revenue Service (IRS) requires all employers to update and resubmit their retirement plans, and the next restatement is due April 30, 2016. Though 2016 sounds far away, re-evaluating whether or not your plan is right for your company and employees should be a thoughtful and careful process.

An appropriate plan design for your organization six years ago may no longer be the most effective. Look at your current plan and consider what it should look like going forward, keeping in mind that an ideal plan will match up with your business goals and objectives. Below are some helpful tips to keep in mind when restating your retirement plan.

Read the document. It may seem elementary, but the reality is many employers do not spend the time to actually read their current plan design. Instead, they sign it and send it back to their advisor. While reading a 50+-page document on your retirement plan may seem overwhelming, it is important to thoroughly read and understand what you plan states.

Ensure your plan and operations match. Ask yourself, “What does the plan say, what are we doing and what do we want it to say?” At this juncture, it’s critical to include everyone who is involved in payroll, human resources, benefits administration, etc. Once you have your team together, begin reviewing your plan and compare the plan provisions to your actual operations and future intent.

Review the terms, conditions and disclaimer. You know that small box that appears at the bottom of a document or website that asks, “Do you accept the terms and conditions?” Don’t just check the box; review them. Every employer needs to know and understand the implications. One error could mean you applied a provision wrong or excluded an employee, which could cost your company hundreds of thousands of dollars. Ultimately, you are the one signing the document―not your advisor―so make sure you review every piece.

This is also a great time to determine areas that can be improved to increase plan participation and give participants a better outcome. Consider adding additional selections such as Roth options, profit-sharing components, Safe Harbor provisions and automatic features.

There is no better time to start reviewing and updating your retirement plan than now. However, if you have a Safe Harbor plan, you may need to have your plan completed by January 1, 2016.

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