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  • Writer's pictureSamantha Diggs

What Are Retirement Plan Restatements And Why Are They Required?

Updated: Mar 10, 2022

As the Third Party Administrator (TPA) for Qualified Retirement Plans, it is our duty to ensure the legal plan documents stay up to date and compliant with the IRS regulations and law changes that affect retirement plans.

The IRS mandates that Defined Contribution Plans (such as 401(k), Profit Sharing, Money Purchase, etc.) be restated every six years to ensure the documents are current and include all changes that have occurred during the prior six-year period. RPCSI submitted our pre-approved documents to the IRS for review and approval in December of 2018, and we anticipate receiving approval from the IRS in late Summer 2020. Once the IRS has given us our approval, we will begin the restatement process for all our clients.

The cycle is set up to give practitioners two years to restate all their plans onto the newly approved legal documents. This means that from the last quarter of 2020 through the 2nd quarter of 2022 we will be working with each client to review, modify, update and make any desired changes to their plan before restating it onto the most recent version of the IRS approved documents.

We are here to make this restatement as smooth as possible, and an important part of that is ensuring the steps of this process are clear. Let’s examine some of the most frequently asked questions about the required restatement.

Q: What is a restatement?

A: A restatement is when your retirement plan is rewritten entirely.

There are frequent changes in laws and regulations that affect retirement plans. Many of these changes are too significant to be corrected with amendments. Therefore, there must be periodic restatements to rewrite the plan entirely, in order to incorporate those major changes.

Q: When must our plan be restated?

A: Plans are restated cyclically within an established period following tax law changes.

Pre-approved plans are restated on a six-year cycle, with amendments to include changes since the last restatement. The IRS requires this restatement and re-adoption by employers to ensure plans are kept up to date with all legislative changes.

Q: When is the restatement deadline?

A: Defined Benefits plans must be restated by July 31, 2022.

The deadline for Defined Contribution Plans is tentatively set for July 31, 2022.

Q: What if I miss the deadline?

A: You will need to correct through the IRS Correction Program, or you may risk losing your qualified retirement plan status, which is costly.

Your assets and employee assets will be taxable for the following year. There is a “non-amender” penalty from the IRS. It is determined by calculating the taxes due on all assets in the plan, plus interest and/or penalties for late taxes. This calculation may go as far back as three years.

Q: What steps do I take to restate my plan?

A: To begin the process, RPCSI will provide you with a review of your current plan provisions. Then the process goes as follows:

1. RPCSI will provide any recommended changes to enhance your plan.

2. RPCSI will request a signed confirmation of approved changes.

3. RPCSI will request pre-payment for the document restatement.

4. Upon receipt of the signed confirmation and the payment, RPCSI will complete the restated document.

5. RPCSI will provide you with a Plan Highlights of your restated document for your review and final approval.

6. Once final approval is received, RPCSI will prepare the Electronic Notebook and forward it to you via DocuSign for signatures.

7. Once the restated document is signed, you will automatically receive a copy through DocuSign and RPCSI will upload the newest document to our Partner Portal.

If you still have questions that we did not cover, please reach out to us and let us know how we can help.

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