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Busy Fourth Quarter for Qualified Plans
– November 19, 2009
The last quarter of 2009 is going to be full of activity for most qualified plans. Plan sponsors can soon expect to receive the customary annual census request and 5500 questionnaire and also their Safe-Harbor notices and Minimum Required Distribution (MRD) letters. Most third party administrators (TPAs) have begun the plan document restatement process and employers can expect to receive these before the due date of April 1, 2010. In addition, all 2009 5500's will be required to file electronically, and each authorized signer will need to register for electronic credentials with the Department of Labor.
The Safe-Harbor Notices and MRD letters are usually sent to clients between November 1 and December 1, as the Safe-Harbor notices must be distributed to employees thirty days before the end of the plan year, and MRD's must be distributed before December 31, 2009.
Most employers can expect to receive their annual census request sometime in mid December. If you do not operate a Safe-Harbor plan then it is imperative that you complete and return your census information to your TPA before March 15, 2010, to avoid penalties that might occur by taking failed ADP/ACP test refunds after this date. If you do maintain a Safe-Harbor plan then in most cases you automatically pass the ADP/ACP test and are exempt from taking failed test refunds.
Lastly, recent legislation has been enacted that allows MRD's to be suspended for 2009 only. Each participant who would normally take a MRD will be able to forego their distribution for 2009 to allow the participant to recover some of the recent market losses. If the participant still wishes to receive their MRD then they may elect to do so by completing the necessary paperwork to facilitate the distribution of their funds before December 31, 2009.
Subsequently, the IRS is requiring retirement plans to incorporate all the changes that have been enacted by Congress in the past 5-7 years, specifically the Economic Growth and Tax Relief Reconciliation Act of 2001 or EGTRRA, into their plan documents. All pre-approved defined contribution plans (prototype and volume submitter) are required to be restated by April 1, 2010, in order to maintain their favorable tax status.
An amendment is also required for the Pension Protection Act of 2006 (PPA). This amendment must be signed and dated by each plan trustee on or before December 31, 2009. Because of the amendment's earlier due date of December 31, most TPA's will most likely request that both the EGTRRA restatement and the PPA amendment be signed and dated by each plan's trustee and returned no later than December 31, 2009 to protect and guarantee each plan's qualification.
Another important change this year is the development of the EFAST2 system. EFAST2 is an all-electronic system which has been developed to receive and display forms 5500 and 5500-SF Annual Return/Reports beginning in 2009. Under the Department of Labor's final rule on annual reporting and disclosure, all plan years 2009 and later for 5500 Annual Return/Reports must be filed electronically using the EFAST2 system. EFAST2 electronic credentials must be obtained by each authorized signer in order to sign and/or submit the form 5500 to the DOL. More information on this process can be obtained beginning January 1, 2010, at www.efast.dol.gov.
Finally, the IRS has announced that the cost-of-living adjustments to dollar limitations for pension plans will remain unchanged for 2010. These limitations are listed below:
| Limitation | 2010 |
| Elective Deferrals | $16,500 |
| Catch-up | $5,500 |
| HCE Definition | $110,000 |
| 415 Limitation | $49,000 |
| Qualified Plan Compensation Limit | $245,000 |
If you have any questions or require further information regarding any of the discussed topics, please contact the Employee Benefits Department at Heard, McElroy & Vestal.
Angela Vascoe
318.429.2053
avascoe@hmvcpa.com
Angela is a Retirement Services Specialist in our Retirement Plan Services department. She earned a Bachelor of Science in both Accounting and Finance from Louisiana State University in Shreveport.
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