Understanding Qualified Plan Amendments
By Lisa Haberman, Ed.D., QKA, ChFC, CLU
I’m hearing a lot about upcoming amendment and restatement deadlines for retirement plans. Can you help me understand what’s required, and how recent legislation like SECURE 2.0 fits in?
As retirement plan regulations continue to evolve, it is essential that employers and plan administrators maintain careful attention to key deadlines and new legislative mandates. Particular attention should be paid to the maintenance of plan documents, as these serve as the foundation for plan administration and compliance.
Understanding the Restatement and Amendment Cycles
Six-Year Restatement Cycle for Plan Documents
Every six years, all document providers are required to fully revise their pre-approved and individually designed plan documents and obtain new approval letters from the IRS. During the restatement process, documents are updated to include language for rule changes since the last restatement and then reviewed and approved by the IRS to make sure the language of the document satisfies the changes identified in a cumulative list provided by the agency. The current restatement cycle, known as “Cycle 4”, requires plan document providers to update existing plan documents to include specific provisions listed in Publication 6088, Defined Contribution Listing of Required Modifications and Information Package (LRM). This document lists specific updates to plan documents based on regulatory changes detailed in IRS Notice 2024-3, the 2023 Cumulative List of Changes In Plan Qualification Requirements and Internal Revenue Bulletin 2024-2. The updated regulations reflect retirement plan provisions introduced by the following legislation.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
Setting Every Community Up For Retirement Enhancement (SECURE) Act
The SECURE 2.0 Act
“Snap-on” Amendment Cycle for Plan Documents
Defined contribution plan documents must also be regularly amended to align with statutory and regulatory updates before each six-year restatement period. These ongoing "snap-on" amendments ensure that all plan documents comply with current laws, safeguarding the plan’s qualified status and protecting both employers and participants until the next plan restatement.
The IRS annually releases a required amendments list that itemizes the specific provisions that need to be included in a “snap-on” amendment. Typically, a provision will be added to the required amendments list after the IRS issues guidance that pertains to the listed provisions, but the IRS may also include provisions when statutory changes occur, even if no further guidance is expected. For example, plan document language for defined contribution plans (i.e., 401(k) and 403(b) plans) will generally need to be updated to comply with the provisions detailed in the 2024 Required Amendments List by December 31, 2026.
Will the Cycle 4 Restatement Include All Provisions Required to be Compliant with SECURE 2.0?
No, the IRS has not had sufficient time to issue guidance on all SECURE 2.0 provisions before the publication of Publication 6088 or inclusion in the 2024 Required Amendments List. As a result, restated Cycle 4 plan documents will incorporate some, but not all, SECURE 2.0 provisions. Consequently, employers will be required to adopt a "snap-on" amendment to the Cycle 4 restated plan document to remain compliant with any SECURE 2.0 provisions for which IRS guidance is released after the Cycle 4 restatement deadline.
