Is it Time to Restate Your Defined Benefit Pension Plan?

If you sponsor a frozen defined benefit pension plan, a mostly “vanilla” individually designed defined pension plan or a defined benefit pension plan already on a pre-approved format, you will want to think about restating your plan now in the most recent IRS pre-approved format. The restatement satisfies the need to update the plan for the Pension Protection Act of 2006 (“PPA”). This is true for traditional defined benefit plans, as well as cash balance plans. The deadline for the PPA pre-approved plan restatement is April 30, 2020.

Here are some reasons to consider restating your defined benefit plans using the IRS pre-approved PPA plan document formats:

Simplicity in Form

Because pre-approved plans are submitted for IRS approval prior to their adoption by a particular employer, they are set in form to a certain extent. Nevertheless, they still allow for provisions unique to each employer’s plan. A pre-approved plan provider will electronically input the unique provisions of your plan, and software systems generate the documents required for the plan. In this case, either the Adoption Agreement that is paired with a Base Plan Document (common for 401(k) plans) or pre-approved format that looks like an individually designed plan. The software generally also creates a summary plan description (SPD) and resolutions for the restated plan’s approval and adoption. As a reminder, SPDs must be amended and distributed every five years if the plan has been amended since the most recently issued SPD, and every ten years even if there have been no amendments.

IRS Approval

Under the revised determination letter program, a plan sponsor of a an individually designed defined benefit pension plan can no longer get IRS assurances on the qualified status of the plan document between its inception and termination, except under very limited circumstances. However, a pre-approved plan provider gets an IRS opinion letter on the pre-approved plan, and the adopting employer can generally rely on this letter. Moreover, the plan provider will get a new letter on the pre-approved plan every six years, the pre-approved plan restatement cycle, to reflect changes in the plan and changes in applicable statutes, regulations, and other guidance. If your plan is headed for termination, restatement on the IRS pre-approved plan format should reduce the time the IRS takes to review the document during the plan termination process.

Streamlined Services

If the plan provider you choose also administers your defined benefit pension plan and/or provides actuarial services, the pre-approved PPA defined benefit plan document will be very familiar to it. The plan provider will be able to point a plan administrator to applicable plan provisions for their consideration more quickly and more cost-effectively when the plan sponsor is looking for answers to its questions about plan administration.


Every six years or so the IRS will require restatement of the pre-approved defined benefit pension plan document and will issue a new opinion letter upon which an adopting employer can rely. This cycle’s amendment and restatement is generally referred to as the PPA restatement. The subsequent restatements on the revised pre-approved documents will be more cost-effective than drafting amendments to each individually designed plan for each required change since the provider will be inputting virtually the same information to generate the new restated documents. This is especially true for frozen defined benefit plans that will have little change.

Required Interim Amendments

If the IRS requires amendments to the pre-approved PPA defined plan documents that don’t require employer elections, they will be adopted by your plan provider for all adopting employers, and the adopting employer will be given a copy. Otherwise, the provider will issue a pre-approved amendment, with elections, that the adopting employer will complete and execute.

Not every defined benefit pension plan is going to fit into an IRS pre-approved PPA plan document format. The provider of your choice will need to look at your current plan documents to determine if this kind of restatement is possible. With the holidays between now and April 30, 2020, the time to consult with your trusted advisors is now. For those of you who sponsor defined contribution plans, the next pre-approved defined contribution plan restatement cycle is expected to be announced by the IRS at some point in 2020.

Questions? Please contact the Findley consultant you regularly work with, Sheila Ninneman at, 216.875.1927.

Published November 14, 2019

© 2019 Findley. All Rights Reserved.

Proposed E-Delivery Safe Harbor Recognizes Online Reality

On October 22, 2019, the DOL announced new guidance that should go a long way toward bringing the delivery of ERISA-required disclosures and notices into the 21st Century. It should also provide significant cost savings for plan sponsors. This e-delivery safe harbor will be in addition to the safe harbor issued by the Employee Benefits Security Administration in 2002.

The new safe harbor e-delivery option will permit plan administrators to notify participants electronically that information is available online. The notice must include:

  • a brief description of the document being posted online,
  • instructions on how to access the information,
  • information on how to receive paper versions of the information,
  • how to affirmatively opt out of electronic delivery, and
  • a telephone number to contact the plan administrator or other designated plan representative.

The proposed safe harbor includes standards for the website where disclosures will be posted and outlines system checks for invalid electronic addresses.

This safe harbor option eliminates the 2002 safe harbor requirement that participants must opt in to receive disclosures electronically outside of work email. The notice from the plan sponsor under the new guidance could be issued via work email, a plan sponsor-issued smartphone or a personal email address as supplied by the participant.

The DOL guidance seeks input on additional changes to the content, design, and delivery of ERISA-required disclosures.  Comments are due by November 22, 2019. A fact sheet on the proposed e-delivery safe harbor option is available here.

Questions? Please contact the Findley consultant you regularly work with, or Sheila Ninneman at, 216.875.1927.

Published November 7, 2019

© 2019 Findley. All Rights Reserved.

The IRS Provides Clarity on Uncashed Retirement Distribution Checks

Qualified retirement plan sponsors now have answers to a few of the questions they have tossed around for years about the tax treatment of uncashed retirement distribution checks.

IRS Provides Clarity on Uncashed Retirement Distribution Checks

In Revenue Ruling 2019-19, August 14, 2019, the IRS provides guidance regarding the tax treatment of distribution checks cashed in a year other than the year of distribution or not cashed at all.

The IRS clarifies that if a participant or beneficiary does not cash a distribution check in the year of issuance, the individual must still include the amount in gross income for that year. In addition, if any withholding is required on the distribution, the issuer must withhold and report for the year in which the distribution is made, regardless of whether the check is cashed in the same year. In addition, the 1099-R is issued for the year of distribution and must reflect the distribution amount and amount withheld.

Unfortunately, the IRS did not take this opportunity to provide clear guidance around what to do when a distribution involves a missing or lost participant. In this ruling, the IRS states that it is still analyzing the missing participant issue. Presumably, this means that if a check is returned to a plan as undeliverable this IRS guidance does not apply.

Even without guidance on the missing participant issue, this IRS ruling provides welcome clarity in an area that was confusing for participants and plan administrators alike. In addition, it may provide needed encouragement to participants and beneficiaries to cash distribution checks in a timely manner. The result would relieve the plan administrator’s need to continue to track the distribution checks and eliminate any possible need for amended tax returns for the participant or beneficiary.

Questions? Please contact the Findley consultant you regularly work with, Sheila Ninneman at, 216.875.1927, or John Lucas at, 615.665.5329.

Published August 28, 2019

© 2019 Findley. All Rights Reserved.

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