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Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

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Beginning on May 1, 2014, and continuing for two years, all tax-qualified retirement plans must be restated. This presents an ideal window to re-review your benefits plan to see if it’s meeting your goals.

Benefit plan performance and fees

Why Stop at Compliance? Amend Your Tax-Qualified Retirement Plan Before Restatement

  • 3/20/2014

Update 4/1/2014: With the issuing of plan document approval letters in late March (IRS Announcement 2014-16), the document restatement period for tax-qualified retirement plans is set from May 1, 2014, to April 30, 2016. CLA recommends that plan sponsors analyze the effectiveness of their retirement benefits plan in conjunction with the restatement process.

The IRS requires the restatement of all tax-qualified retirement plans every six years to reflect any changes in laws and regulations. But this process doesn’t have to end with IRS compliance. The amendment cycle, which will likely begin in May, is the ideal window for plan sponsors to take a hard look at your employee benefits plan to see if it’s doing everything it could and should for your organization and your employees.

Even if the plan is performing as intended, there may be opportunities to make it do even more, and cost less.

Beginning on May 1, 2014, and continuing for two years, all tax-qualified retirement plans must be restated. Download samples of our two tools to help you take full advantage of this window of opportunity. Plan Check-UpRetirement Plan Diagnostic Report

“Your organization and your employees change, so your retirement plan should change along with them,” says John Stiglich, the principal-in-charge of retirement services with CliftonLarsonAllen Wealth Advisors, LLC. “The IRS restatement period is a chance to step back and revisit the provisions of your plan to see if it’s still the valuable employee benefit it was meant to be.”

Beginning on May 1, 2014, and continuing for two years, all 401(k), profit sharing, and other tax-qualified plans using an IRS-approved prototype plan document must be amended and restated. This allows your plan to formally “catch up” to new laws and regulations. Even if plan amendments have been issued to participants in the past, they must now be incorporated and made a permanent part of the “core” document. Failure to do so may cause a plan to lose its “qualified” status with the IRS, along with the tax benefits that it offers employers and employees.

Assess the effectiveness of your benefits plan

Since you have to delve into the details of your benefits plan anyway, ask yourself if it’s doing everything it could. Start with the basics and leave no stone unturned as you question plan features and look for ways to make improvements.

  • Are you getting the maximum deductions and allocations?
  • Are highly compensated employees regularly getting refunds of some of their 401(k) deferrals?
  • Should you add an “auto enrollment” and/or “auto escalate” feature?
  • Do the eligibility criteria still work for your current employee mix?
  • Should you add provisions, such as a Roth deferral or in-plan Roth conversion?
  • Have you considered a rollover provision for non-spousal beneficiaries?
  • What are the benefits of modifying the vesting schedule?
  • Does the plan have a loan provision? If so, are employees using it? If not, should you add one?

Some of these questions are not easy to answer and may require you to analyze your current participant census and compare various scenarios.

Are your retirement plan fees reasonable?

On an annual basis, the Department of Labor (DOL) requires retirement plan trustees to review plan fees charged by service providers (e.g., record keepers, investment advisors, accountants, lawyers) to determine if they are “reasonable.” A benchmark report is an effective method for meeting the DOL regulation. Benchmarking allows you to compare key attributes of your plan (like fees) to similar-sized plans elsewhere in the country and in your industry. A determination about the reasonableness of fees is more credible with the evidence produced by a benchmarking study.

How we can help

CliftonLarsonAllen offers three complimentary tools to help you comply with the restatement law and examine the effectiveness of your plan. Our Plan Check-Up looks at the current plan design to see if it is accomplishing your goals. The Retirement Plan Diagnostic Report addresses your fiduciary responsibilities and gives you a benchmark for how your fees stack up to other plans. If your fees look high, we can run a Retirement Plan Efficiency Analysis (RPEA) to illustrate how an alternate recordkeeping and investment platform could result in reduced fees while maintaining or improving the plan’s benefits and features.

Talk to your CLA advisor about putting these tools and resources to work to see if they can help improve your retirement benefit plan.