The Internal Revenue Service (the “IRS”) has provided help on it’s website for any employer who missed the April 30, 2012 deadline for adopting a compliant pre-approved document for its defined benefit plan. By way of background, the IRS says that, if an employer uses a pre-approved plan document for its defined benefit pension plan (purchased from a bank, insurance company or a similar provider), the employer should have adopted an updated version of its plan by April 30, 2012 (adoption requires a signing and generally any action required by the employer to approve the signing, such as a board resolution).
The plan’s provider should have sent the employer an amended plan document, approved by the IRS complying with changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), for the employer to adopt. Even if the employer signed an EGTRRA amendment (sometimes referred to as “EGTRRA good-faith amendments”) to its plan, the employer is still required to adopt an EGTRRA plan document. The failure to adopt by the April 30 deadline means that the employer’s plan no longer complies with the tax law and certain tax benefits are no longer available.
So what happens if the employer missed the April 30 deadline? The IRS says that you should correct the failure by filing an application with the IRS’s Voluntary Correction Program (the “VCP”). The IRS website provides the details on this application.