The Internal Revenue Service reminds the approximately 750,000 small and mid-size
businesses using “off-the-shelf” retirement plan documents that they
must update their plans by Sept. 30, 2003. Businesses must formally adopt updates
to maintain the tax benefits associated with retirement plans.
The deadline is a result of rules that apply to so-called Master & Prototype
(M&P) plans and Volume Submitter plans. These off-the-shelf retirement plans
are IRS-approved templates intended to standardize and simplify the complex
employee plan area. Employers who provide such plans for their employees are
typically small to mid-size businesses, including self-employed persons, such
as some doctors and lawyers.
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Get Your Report Now!M&P plans are “off-the-shelf” documents that employers obtain
from sponsors such as banks, brokers, insurance companies, lawyers or consultants.
Volume Submitter plans are more customized documents usually obtained from lawyers
or consultants. Although the sponsors have updated the plan documents, employers
still need to formally adopt the updated plans by September 30.
Both businesses and their employees enjoy tax benefits from retirement plans
that are in compliance with the law. Failure to act by the deadline could cost
a retirement plan its tax-favored status.
“We are concerned that employers may inadvertently miss the deadline,”
said Carol Gold, Director of Employee Plans at the IRS. “We urge employers
to consult the sponsor of their M&P or Volume Submitter plan document and
their pension plan advisor or attorney now. The September deadline will be here
before you know it.”
Many employers will only need to make sure they adopt their plan amendments
by September 30. But others also have to file the amendments with the IRS by
September 30 to keep their plans tax qualified. For example, an employer who
adopts a pre-approved M&P plan, but makes changes beyond those allowed by
the adoption agreement, must file an application with the IRS for a determination
letter by September 30 to keep the plan’s tax benefits.
Employers or plan sponsors who need more information should call toll-free
the customer account services at 1-877-829-5500.