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Is Your Employee Benefit Plan Up to Date? Don’t Miss These Required Deadlines!


Your pre-approved employee benefit plan document will likely be getting a “facelift” soon thanks to certain Internal Revenue Service (IRS) required restatements and amendments. Plan sponsors will be responsible for ensuring their company’s employee benefit plans are complying with required deadlines; however, most should already have been contacted by plan service providers to get the ball rolling on these changes.

The IRS requires companies to periodically restate their qualified retirement plan(s), approximately every six years to incorporate new laws, regulations and other amendments that have been implemented subsequent to the effective date of existing plan documents. In 2020, the IRS Cycle 3 restatement process was announced, giving companies through July 31, 2022, to update their pre-approved plan documents, which includes prototype and volume-submitter plans. The required Cycle 3 restatements will need to reflect any legislative changes made before February 1, 2017, and will ensure your plan remains in compliance with IRS and Department of Labor (DOL) requirements.

Plan trustee(s) will be required to sign all applicable restated documents by the IRS deadline of July 31, 2022, in order to remain compliant and failure to follow these guidelines could lead to monetary penalties or could jeopardize your plan’s qualified tax-favored status. Once the restatement process is completed, the plan will receive several new plan documents, including an updated determination letter from the IRS approving the tax-favored status. As a reminder, plan design and provisions (automatic enrollment amounts, employer contribution types and amounts, definition of compensation, vesting schedules, etc.) will not change with the restated documents.  Plan participants will need to be notified of the updated plan documents after the new documents are signed and once the summary plan description is available. Though, no plan participant action should be required to accept the changes.

It is also important to note that any adopted plan provisions stemming from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Setting Every Community Up for Retirement Enhancement (SECURE) Act are required to be reflected in formal plan amendments by December 31, 2022. However, these amendments will not be included in Cycle 3 restated plan documents, but rather will need to be “snap-on” amendments to the restated forms.

If your company’s benefit plan is individually designed, often the case for defined benefit plans, health and welfare plans and Section 403(b) plans, the required Cycle 3 restatement process will not apply. Individually designed plans are not required to obtain an updated determination letter from the IRS on a scheduled basis. Instead, plan sponsors for individually deigned plans must monitor the IRS annual Required Amendments (RA) List for any new laws and/or regulations applicable to their plan and make applicable changes to plan documents through plan amendments. Generally, plan sponsors must adopt any item placed on the RA List by the end of the second calendar year following the year the RA List is published. For example, plan amendments for items on the 2020 RA List generally must be adopted by December 31, 2022.

With several important benefit plan restatement and amendment dates coming very soon, it is important that plan sponsors and trustees ensure their company’s plan(s) are in compliance. We strongly recommend reaching out to your third-party administrators and other service providers now to make sure these regulatory deadlines are met.

Contributing author:  Benjamin A. Sumner, CPA, is an audit partner with over 12 years of experience providing auditing, accounting and consulting services to a wide variety of privately-held businesses. Contact us to learn more about how we can help.