Retirement Plan Restatements: Everything You Need to Know

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If you’re a business owner with an active retirement plan, whether it be a defined benefit/cash balance plan or 401(K), it’s important to be aware of required plan restatements. You can voluntarily restate your plan at any time if you want to make changes. However, there are times when restatements are required by the IRS.

What is a plan restatement and when are they required?

Retirement plans must follow a set of rules and regulations set forth by the IRS, and when these change, the plan documents must be amended based on those changes. The IRS requires pre-approved, company-sponsored plans to be restated approximately every 6 years. The Pension Protection Act (PPA), which was passed by Congress in 2006, set forth these rules. We are currently in Cycle 3, also known as Post PPA.

During the restatement process, TPA’s such as Emparion will update the plan documents and have the trustees resign these documents. These document updates might also include any amendments or changes that have been made since the original plan documents were created.

What is Cycle 3?

Cycle 3 is the name for the current restatement period for defined contribution (DC) plans. It’s named Cycle 3 because it is the third restatement that has been required by the IRS since the 6-year cycle period begun. The Cycle 1 deadline for DC plans was 04/30/2010 and the Cycle 2 deadline was 04/30/2016.

Is the Cycle 3 restatement mandatory? When is the deadline?

IRS restatements are mandatory for any pre-approved documents and must be completed by a specific deadline. The current Cycle 3 Plan Restatement deadline is July 31, 2022.

What happens if my plan documents aren’t restated by the deadline?

If your plan documents are not restated by the deadline, your plan may fall out of compliance. This could potentially lead to IRS-imposed penalties, such as paying taxes on your investment account balance.

What is a pre-approved plan? Do I have one?

A pre-approved plan is a document that has already been reviewed and accepted by the IRS. If your plan is pre-approved, you should have been issued an IRS letter along with your plan documents when your plan was first established. All plans set up by Emparion are pre-approved.

What is the cost of a plan restatement?

We charge a small fee based on plan specifics. We will let you know the price of your restatement beforehand.

What documents are included in the restatement?

The following documents will be restated:

  • Adoption Agreement
  • Basic Plan Document
  • Summary Plan Description
  • Plan Highlights
  • Updated IRS Pre-Approval Letter

What do I need to do?

Emparion will handle the restatement process. We will provide you with the amended documents electronically as well as a link to e-sign. All you will need to do is review and sign to implement the new documents.

I’m planning on terminating my plan. Do I still need to have it restated?

Prior to terminating, your plan must be consistent with the current IRS regulations. Any amendments will need to be made before your plan can be terminated. Therefore, you will still need to restate your plan unless your plan is currently up-to-date and will be terminated before the restatement deadline.

Paul Sundin

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