7/31 deadline for Cycle 3 restatement

May 15, 2022

It may seem everything is going well with your pre-approved 401(k) plan.

But are you on course for Cycle 3 restatement?

Pre-approved plans are those sold to employers by qualified financial institutions or benefits providers. Approximately every six years, the IRS requires pre-approved 401(k) plan documents to be “restated.”

This year’s Cycle 3 restatement deadline is July 31, 2022.

If you miss it, it can have serious consequences.

What is Cycle 3 restatement?

Restatement is the process by which a business adopts new pre-approved plan documents with required regulatory changes and other amendments.

“Cycle 3” refers to legislative and statutory changes made before February 1, 2017. For some, 2017 feels a lifetime ago—sure enough, required changes are substantial.

Some highlights include:

  • Rules recognizing same-sex marriages
  • Provisions for mid-year changes to safe harbor nonelective contributions
  • Changes to Qualified Matching Contributions and Qualified Nonelective Contributions
  • Expanded options for rollover from a 401(k) account to its designated Roth account

What if you don’t restate your pre-approved 401(k) plan? 

If you don’t comply, your pre-approved 401(k) plan’s qualified status may be endangered. If the IRS determines your plan is not qualified, all assets may become taxable.

When assets “unexpectedly” become taxable, the sky’s the limit on potential liabilities—they may include interest and late payment penalties extending to when the plan began.

Cassell Plan Audits makes restatement easy 

Though many businesses have now completed restatement, it’s not unusual for smaller companies to work up to the deadline. The problem: that doesn’t give you time to correct oversights.

Restatement must be approved by the IRS, so there’s no margin for error. If you have a pre-approved “rubber stamp” plan, make sure your TPA is on the case—or reach out to someone who can help. 

With Cassell Plan Audits, you’ll have expert insight to ensure your restatement incorporates all necessary adjustments. That’s the best way to ensure smooth sailing in your pre-approved 401(k) for the next six years!

Call Cassell Plan Audits at (630) 886-7669 to learn more or get started.

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