Monthly Archives: August 2015

Now’s the Time to make Changes to your Retirement Plan

Start the Process Now

By Jeffrey R. Spencer, CPA, Principal, Ciuni & Panichi, Inc.

Jeff SpencerMost defined contribution retirement plans, such as 401(k), profit sharing, and money purchase plans will need to be restated by April 30, 2016 to incorporate the provisions of the Pension Protection Act of 2006 (“PPA”) and various other changes that took effect between 2007 and 2011.  As a result, you may recently have been contacted by your retirement plan document provider informing you they will be restating your plan in the coming months.

Before you agree to this restatement, you should determine if you want to make any additional changes to the provisions of your retirement plan.  These can be simple changes such as adding an employer matching contribution, or major changes such as implementing a safe harbor plan in order to avoid annual nondiscrimination testing.

Now is the time to review the provisions of your retirement plan to ensure they are in line with the objectives of your organization.  One restatement covering both required and desired changes can avoid costly amendments in the future.

In addition, now is an ideal time to review the vendors servicing your retirement plan – especially those providing investment advice and plan administration.  The fees for these services are now more transparent.  Over the last several years with advances in technology, these services are now more competitively priced.  If you are considering a change in plan provider, you will want to know if the new provider can use your current plan document or if they require you to use their own plan document.  Consequently, you will want to make changes in plan vendors before you restate your plan.

Finally, now is the time to consider if your organization is a candidate for some of the more advanced types of retirement plans being used by employers to allocate larger benefits to key executives and owners.  Plans such as cross-tested profit sharing plans and cash balance plans may be used in conjunction with a 401(k) plan to provide maximum benefits to specific employees without violating many of the nondiscrimination rules conventional retirement plans must adhere to.

Although April of 2016 seems a long way off, now is the time to plan ahead for the April 30th PPA restatement deadline and review the key provisions of your current retirement plan and the vendors that service your plan.

Please contact Jeff Spencer at 216-831-7171 or jspencer@cp-advisors.com for more information on this topic.

Jeff Spencer is a Tax Principal at Ciuni & Panichi, Inc., and he is the head of the employee benefits tax services group.

You may also be interested in:

2015 Summer State Tax Update

More Than Money:  Customer-Smart Invoicing