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Amendment Deadline Extended

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At several professional conferences, the IRS has informally announced an extension of the required amendment period affecting qualified retirement plan. All retirement plans must be amended to comply with tax law changes made by the following laws:

Uruguay Round Agreements Act
Small Business Job Protection Act of 1996
Taxpayer Relief Act of 1997
Internal Revenue Service Restructuring and Reform Act of 1998

You will now have until the last day of the plan year beginning in 2001, to amend your plan to comply with these required law changes. Prior to this announcement, the amendment deadline was the last day of your plan year beginning in 2000. If your plan is on a calendar year, you will have until December 31, 2001 to make the amendments. The IRS has issued Revenue Procedure 2000-27 formally announcing the extension of the redial amendment period.

This extension does not completely let you off the hook. You still must operate your plan in compliance with all the law changes. A few of the changes that you must make to your plan document include changes to:

Definition of pay used to calculate maximum benefits
Rules used to determine if a 401(k) arrangement is discriminatory
Definition of "highly compensated employees"
Method of returning excess contributions
Treatment of family members
Raise the cash out limit
Eligibility of hardship distributions to be rolled over
Calculation of current liability funding limit
Interest and mortality tables

For a complete list of the required changes you can visit the IRS’s web site at www.irs.gov. The list of required modifications is located at http://www.irs.gov/bus_infor/ep/lrm.html. They have separate lists for defined benefit, defined contribution and 401(k) type plans. If you have questions about how these law changes may affect your plan, call us at (860) 313-5470 or contact us.

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