At the heart of tax qualified retirement plan compliance is a
requirement to timely adopt plans and plan amendments. Failure to
adopt plan amendments when required can result in plan
disqualification. Accordingly, it is very important for plan
sponsors to prove that amendments were properly executed in a
timely manner. In a General Legal Advice Memorandum from the
IRS's Office of Chief Counsel dated December 13, 2019, the IRS
provided a reminder of this important qualification requirement and
the ramifications of noncompliance.
(The issue of when plan amendments must be made is a
technical issue and will vary based on a number of factors,
including whether the amendment is a legally-required amendment, an
optional/design amendment, or an amendment required as a condition
of obtaining a favorable IRS determination letter for the plan.
This blog addresses the separate technical requirement to prove
that a plan amendment was properly adopted.)
