I didn’t have such a great time at law school because I felt the administration and much of the faculty weren’t honest when it came to the study of law and more importantly, our job opportunities. There was one law professor who was a shining light because he told it like it was and was just up front and honest with people. His name is Bernie Corr. I don’t mind the C+ in Civil Procedure because he told us that some of us were getting that grade and I did better with him in two other classes.
History has shown that I love people who are upfront and honest about things and I show less love for those who hide the ball.
When it came time to a Bankruptcy seminar course, he told us that any changes in bankruptcy are a boon to bankruptcy law and was insisting that many of these changes might have to do with making money for bankruptcy attorneys.
Every 6-7 years every retirement plan has to be restated into a new plan document and every few years, there needs to be ancillary amendments. I admit that I steal professor Corr’s line that all these amendments and restatements are to keep ERISA attorneys like me employed. Seriously, retirement plan laws change and plans have to be amended to reflect that.
For the past 15 years, there has been a host of plan restatements and ancillary amendments that have been required for all retirement plan sponsors. There have been so many ancillary amendments, that even I have to keep a full checklist of what was done. Plan sponsors are in worse shape because many don’t have all the ancillary amendments (whether they were done or not and whether they were actually signed or not) and the Internal Revenue Service (IRS) knows that especially when it comes to plan audits. Not having all the required plan amendments and restatements is an excellent way for the IRS to make a few shekels on penalties when auditing a plan.
The problems with plan sponsors missing amendments probably has increased since the IRS has pretty much eliminated the favorable determination letter program.
So it’s a good idea for a plan sponsor to take inventory of their plan documents and amendments to make sure they have a set that is up to date and correctly dated. If not, a submission to the IRS’ voluntary compliance program beats getting penalized on an audit because it costs a lot less.