Susan sat down next to Ed during their SHRM chapter’s pre-meeting networking session.
“Ed, I’m so bummed out! I got caught up in all the 2020 COVID madness and the deadline for restating our contribution plan blew right by me. I was supposed to file that before July 31 of 2020 and now it’s…”
Ed put a reassuring hand on Susan’s arm. “Don’t worry. That happened to you, me, and a lot of other people. Our Retirement Plan Consultant got me straightened out.”
Susan shook her head. “Our payroll company just told us to file the restatement and pay the penalty. They were no help at all!”
“And that’s why we don’t let our payroll people anywhere near our plan anymore!” said Ed. “Here’s how this was explained to me:”
“For pre-approved defined benefit plans the IRS restatement deadline was July 31, 2020. For defined contribution plans the IRS restatement deadline was 7/31/2022. But here’s the good news: If you missed your deadline, you can self-correct by restating your plan without a formal submission to the IRS. As long as the self-correction is made within three years of the missed deadline, it will be accepted in most cases.”
“Thanks,” said Susan. “If I understand you correctly, this means we don’t have to file with the IRS and we don’t have to pay an IRS compliance fee … and I don’t have to worry about my boss giving me the stink-eye!”
Ed nodded. “Yes, and it also means that the tax-qualified status of your plan will remain intact so you’ll avoid excessive penalties. Just make sure to self-correct before the IRS comes knocking on your door.”
Missed your submission deadline? Contact Frank Grande at 914-251-0099 Ext. 212 or fgarnde@madisonpension.com