Retirement Perspectives: Cycle 3 Plan Document Restatements

A 401(k)-plan document governs a retirement plan’s features and day-to-day operations. It identifies what kind of plan it is, how it works, and what special features it has to customize it to each business’ unique needs and goals. If not prepared carefully and accurately, it can lead to unintended consequences and non-compliance that can be expensive to correct.

Approximately every six years, all qualified retirement plans are required to be updated to reflect recent legislative or regulatory changes. Some of these updates are made through plan amendments, but others require plan documents to be completely re-written. This is a process known as “restating” the plan.

The mandatory restatement of all 401(k) and other defined contribution plan documents is required by the IRS. With the turn of the calendar, a new document restatement process is underway. This is the third such restatement process and is often dubbed Cycle 3.

Our team of retirement plan experts has developed a detailed process to guide you through the restatement for your plan. This process is designed to ensure that your plan document will be accurately restated within the IRS window which ends July 31, 2022.

New for Cycle 3, is the utilization of an electronic delivery and signature process to ensure proper tracking and document retention. This will eliminate inefficiencies surrounding printing, scanning, storing and mailing documents. Upon full electronic execution of the new document, plan sponsors will receive complete, executed copies of all relevant plan documents for their records. We will also retain copies of all plan documents for our clients, as well as post the updated Summary Plan Description (SPD) to the participant website.

Below is an overview of the items the Cycle 3 document will address:

  • Rules expanding In-Plan Roth Conversions of otherwise non-distributable amounts.
  • Final regulations providing for a limited modification of the required minimum distribution rules for tax-qualified defined contribution plans holding Qualifying Longevity Annuity Contracts.
  • Clarification of same-sex marriage rules.
  • Final regulations providing guidance on mid-year changes to Safe Harbor 401(k) Plans.
  • Qualified Natural Disaster Relief provided by the IRS, including, but not limited to, Louisiana storms, Hurricane Matthew, Hurricane Irma, Hurricane Maria and California Wildfires.
  • Regulatory changes of default provisions to hardship withdrawal rules brought about by the Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018.