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Washington -- The Internal Revenue Service Tuesday warned that employee retirement plans could become invalid unless they are updated this year to reflect legislative changes made since 1994.

The IRS said if employers don't update or amend their retirement plans they could "jeopardize the valuable tax benefits of maintaining plans for their employees resulting in additional taxable income for these employers and their employees."

There are varying deadlines depending on the type of retirement plan, but for most large employers the deadline is Feb. 28. The deadline affects 401(k) plans, defined benefit pension plans, profit-sharing plans, ESOPs and Keogh plans.

"It is critical for employees and employers to have these plans amended by the deadline," said Carol Gold, IRS director of employee plans.

Seymour Goldberg, a tax attorney who sits on the IRS's Northeast-area pension liaison group, said the concern is that many small and medium-sized employers are not aware of the changes that need to be made in order to keep their employee retirement plans legal. The deadline for most small employers is Dec. 31.

Goldberg said he believes most large employers are aware of the Feb. 28 deadline to amend their plans.

But, Goldberg said, he is concerned that thousands of plans could become illegal if they aren't amended.

"This could be a debacle. It will make Enron look like a pimple," he said.

But, Mark O'Donnell, the IRS's director of consumer outreach, said the agency isn't interested in "blowing-up" people's retirement plans and will work with employers to ensure they amend their plans.

The IRS said employers must amend their retirement plans to reflect changes made by six laws approved by Congress since 1994 including the Taxpayer Relief Act of 1997 and the Community Renewal Tax Relief Act of 2000.

Specifically, the IRS said Feb. 28 is the deadline to amend retirement plans with some exceptions:

-The deadline for plans with a fiscal year other than a calendar year is later. It will be the last day of the fiscal year that began in 2001.

-The deadline for so-called pre-approved plans is Dec. 31, 2002, and in some cases later.

-The deadline for plans directly affected by the Sept. 11 terrorist attack is June 30, 2002, with a possible extension until Dec. 31 if an application for such an extension is filed.

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