As we approach the end of 2014, sponsors of qualified plans may be interested in the following to-do list with action items to focus on before the end of the year or in early 2015:
- Amend the plan to comply with United States v. Windsor. Depending upon the definition of “spouse” in the plan document, a plan amendment may be required. “Spouse” may not be defined as a member of the opposite sex or as consistent with Section 3 of the Defense of Marriage Act. Generally, plans must be amended by the later of December 31, 2014 or the due date of the company’s tax return for the tax year that includes the date the amendment is first effective.
- Adopt plan design changes by the plan’s year end. The plan generally must be amended to reflect any design changes by the last day of the plan year, or December 31, 2014 for calendar year end plans.
- Adopt plan restatement if in Cycle D. If a qualified plan is individually designed and falls in Cycle D (e.g., the EIN of the plan ends in 4 or 9), the plan must be restated and submitted for a determination letter before January 31, 2015.
- Update the Summary Plan Description. Summary Plan Descriptions must be updated once every five years if the plan has been amended during the five year period. Otherwise, it must be updated once every 10 years.
- Review 2015 plan limits. Become familiar with 2015 plan limits. Some common limitations include:
- 401(k) deferral limitation increased from $17,500 to $18,000
- Catch up contribution increased from $5,500 to $6,000
- Limitation on annual eligible compensation in a defined contribution plan increased from $260,000 to $265,000
We continue to see increased scrutiny of plans by the Department of Labor (DOL) and the Internal Revenue Service (IRS). The cost of compliance – both in time and money – is often much cheaper than the administrative costs of a DOL or IRS examination.
For more information, contact Mark G. Metzler, Director, Audit & Accounting at Email or 215.441.4600.
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