Sign it and save it (and know where it is)

On December 9, 2019, the IRS released Chief Counsel Memorandum 2019-002 which addresses the subject of retirement plan documents that must be timely adopted and maintained.

The Memorandum states that it is unlikely a plan sponsor could meet its burden of proof that a plan document had been executed pursuant to Internal Revenue Code Section 6001 without producing a signed plan document.

As a result, IRS agents can be expected to pursue plan disqualification if a signed plan document cannot be produced during an examination. So, plan sponsors should establish procedures to ensure compliance and retention of essential records.

What you should know

  • Designate a point person to coordinate the timely execution of plan documents (including amendments) and the retention of these documents.
  • Document corporate actions taken to adopt and execute plan documents through minutes and/or formal resolutions.
  • Create a backup hard copy and retain electronic copies of signed plan documents, and ensure that electronic copies are backed up.
  • Maintain a plan amendment tracking document that includes information such as when the plan amendment was adopted, when it became effective, and when it was added to the plan document and summary plan description.
  • Failure to adopt a required plan amendment can be corrected with IRS permission via the voluntary correction program under the Employee Plans Compliance Resolution System (EPCRS)
  • In limited circumstances, failure to adopt a required plan amendment can also be corrected without IRS approval through the EPCRS self-correction program.