Employers who sponsor retirement plans for their employees must periodically restate the plans for changes in applicable laws to maintain the plans’ favorable tax status. The Internal Revenue Service generally requires that plans be restated on a six-year cycle, the last of which concluded in 2016.
The current cycle is the third since the six-year cyclical program of plan restatements was implemented. Cycle 3 restatements of pre-approved defined contribution plans, including most 401(k) and profit sharing plans, must be adopted by no later than July 31, 2022.
The Appeal of Pre-Approved Retirement Plans
Pre-approved plans are retirement plans offered by a document provider (such as a financial institution or benefits practitioner) for adoption by employers. The plan document typically includes a variety of elective provisions from which an employer may choose and effectively customize the plan to best serve the needs of the organization and its employees.
Before making the plan document available for adoption by employers, the document provider will have obtained IRS approval of the plan as meeting the requirements applicable to tax-qualified retirement plans under the Internal Revenue Code.