Why Must BPC Restate My Plan?

GUST Changes Mandated for Your Plan
Since 1994, Congress has made a number of changes to the laws affecting qualified retirement plans. Collectively, these changes are known as "GUST." Each piece of legislation contained in GUST modified, in some manner, the rules applicable to tax qualified retirement plans. Many of the changes that have been made are advantageous to qualified plans and may benefit you and your plan participants. However, with the benefit of the law changes comes the burden of having to incorporate the law changes into the employer's retirement plan document.

What is GUST?
GUST stands for:
General Agreement on Tariffs and Trade (GATT)
Uniform Services Employment and Reemployment Rights Act (USERRA)
Small Business Job Protection Act (SBJPA)
Taxpayer Relief Act of 1997 (TRA '97)

How Does GUST Affect Your Qualified Plan?
Plan documents must be amended and restated to conform with the GUST requirements and possibly submitted to the IRS for a new determination letter. Some of the changes in the laws also give plan sponsors the opportunity to consider redesigning their plan. As you review your plan document during this period, you should consider whether your qualified plan meets your goals as well as the goals of your employees. The qualified plan is a valuable tool to attract and retain quality employees.

If you are considering making changes in your plan provisions, you should contact your third party plan administrator regarding the possibility of making changes that could further enhance the benefit of your qualified plan.

How Does My Plan become GUST "ified"?
In order to incorporate all of the GUST requirements, all qualified retirement plans, including Profit Sharing, Money Purchase, 401(k) Profit Sharing, Target and Defined Benefit, must be "restated". This means that plan documents must be amended and restated to conform with the GUST requirements and submitted to the IRS for a new determination letter. Plans must be restated no later than the last day of the remedial amendment period "RAP", which is the last day of your plan year that began in 2001 (e.g. by December 31, 2001 for calendar year plans). This means if you have an individually designed plan document, you must amend and restate this document by signing the amended and restated document by the end of the RAP period (which for calendar year plans is 12/31/01).

If you use a prototype, master or volume submitter document, the IRS provided additional time for employers who use these pre-approved plan documents. The sponsors of these documents, such as your Third Party Administrator, are responsible for obtaining IRS approval of the amended and restated plans. When the document sponsor receives IRS approval of the amended and restated plans, they will contact you with the specific steps you must take for your plan to stay in compliance as well as the deadline for completing these steps.

If you are a registered user of a Benefit Planning Consultants [BPC] document, there is a charge for the process of reviewing and preparing your plan document so that it is compliant with all of the necessary changes. If you are not sure if you sponsor a registered BPC Prototype Document or would like additional information regarding a BPC Prototype Document, contact us immediately.

What Rules Should You Follow For Your Plan?
Until you sign the new documents, you must generally operate your plan according to the new laws. When you sign your restated document, the restated document will include the provisions your plan has been operating under during the time between when the law changed and the amendment of your plan.

What Happens if Your Plan is not Restated?
If you fail to restate your plan document in a timely manner, your plan will lose its qualified status, losing all of its tax benefits. Therefore, restating your retirement plan should become a high priority.