Thin(k) About Your 401(k) Plan: Cycle 3 Plan Restatement Requirement


Thin(k) About Your 401(k) Plan


Cycle 3 Plan Restatement Requirement



Have you ever received an email that seems frighteningly relevant, but you have no idea what it’s about?  Some of my clients have had this experience recently upon receiving notice that the IRS is requiring that their plan document be restated in accordance with the Cycle 3 Plan Restatement mandate.  Rest assured that receiving this notice most likely from your recordkeeper does not mean you have done something wrong.


The Cycle 3 Restatement requirement is the third of its kind and applies to any plan that uses a prototype or volume submitter plan document.  These types of plan documents are usually provided by a recordkeeper as part of its service. In between restatement cycles, regulatory and legislative changes are incorporated by an amendment.


The IRS requires plan sponsors to restate their plan document every 6 years to incorporate any regulatory or legislative changes that have occurred since the last mandated restatement.  In other words, this is fairly routine.  However, the restatement is necessary for compliance in order to avoid plan qualification failure.  So, while not unusual, the process is very important, and the IRS requires that it be completed by July 31, 2022.  Additionally, the IRS will provide an opinion letter deeming the new document acceptable prior to it being put in place.  Again, your recordkeeper will likely handle this aspect.


The Cycle 3 Restatement Requirement has numerous elements, but here are a few.  The restated document will include plan rules related to:

  • Qualified Non-Elective Contributions, Qualified Matching Contributions and Safe Harbor Contributions as well as the use of Forfeiture Accounts.
  • Disability claims procedures
  • Option to allow in-plan Roth rollovers

These rules were previously covered by Interim Amendments and will now be a part of the actual document.


If you are hearing about this for the first time or if you haven’t yet been notified, I highly recommend you contact your advisor or recordkeeper for additional information.  Remember this happens every six years and while routine, it is a part of your fiduciary responsibility as a plan sponsor to understand and execute the restated document.


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