Required amendments to your ESOP document

I want to start our discussion of common operational errors with a common error that is not really operational in nature.  Sorry for the confusion but it seems like a logical starting place in this discussion is the ESOP plan document.

The importance of your ESOP document can not be overstated. And it is equally important that you maintain the qualified status of your ESOP by adopting all amendments required by legislative or regulatory changes on a timely basis. Failure to do so could disqualify your ESOP.

Here is a list of the amendments that have been required over the past several years:
 GUST Restatement and Good Faith EGTRRA amendment – must have been adopted by February 28, 2002
 Required Minimum Distributions amendment – must have been adopted by the last day of plan year ending on or after December 31, 2003. 
 Mandatory distributions (a.k.a. Automatic Rollover amendment) required for plans containing automatic cash-out provisions– must have been adopted by the later of the last day of first plan year ending on or after 3/28/05, December 31, 2005, or the plan sponsor’s tax filing due date (including extensions) for the first tax year that ends on or after March 28, 2005.
 Final 415 Regulation Amendment - must have been adopted by the later of the last day of the plan’s “Limitation Year” (see plan document to determine limitation year) ending on or after July 1, 2007; or the plan sponsor’s tax filing due date, including extensions, for the first tax year that begins after June 30, 2007.   For corporate employer’s with calendar tax years, due date is March 15, 2009, or if corporate tax return is extended, September 15, 2009.

Note, there are some additional amendments that would have been applicable for your 401(k) plan and any defined benefit plan.

Also, if you prepare an amendment to your ESOP that is not required but rather is a discretionary change to the design of the ESOP, please make sure that these amendments are also signed on a timely basis. If you inadvertently forget to have these amendments approved and signed but begin to operate the ESOP in accordance with such amendment, your ESOP could now be disqualified for the failure to follow the terms of the plan document.

The timing of the entire restatement of your ESOP document is now based on the last digit of your company's EIN as follows:

Extension of the EGTRRA Remedial Amendment Period and Schedule of Next Five-Year Remedial Amendment Cycle
If the EIN of the employer ends in —	The plan’s cycle is —	The last day of the initial cycle (i.e., EGTRRA remedial amendment period) is —	The next five-year remedial amendment cycle ends on —
1 or 6	Cycle A	January 31, 2007	January 31, 2012
2 or 7	Cycle B	January 31, 2008	January 31, 2013
3 or 8	Cycle C	January 31, 2009	January 31, 2014
4 or 9	Cycle D	January 31, 2010	January 31, 2015
5 or 0	Cycle E	January 31, 2011	January 31, 2016