No Need to Worry About Cycle Three, We’ve Got It Covered
By Jennifer Bassett, QKA, CIP, CISP, CHSP
Being a qualified retirement plan prototype document sponsor can be challenging. Perhaps at one time it made sense to provide this service in-house. But does it still make sense for your organization? With the “Cycle Three” restatement in full swing, this may be a good time to cut the costs—and the stress—that comes with being a prototype document sponsor.
Through its Employer Direct Document Service (EDDS), Ascensus can simplify this part of your job by acting as the prototype document sponsor for your clients’ qualified retirement plans. As the prototype document sponsor, Ascensus will provide a plan document to your clients when they establish a retirement plan, as well as any documents required for future amendments and restatements.
Restatement Refresher
To level out its workflow and allow planning for resourcing needs, the IRS created a six-year restatement cycle for pre‑approved plans. Every six years employers must restate their plans to incorporate any regulatory or statutory changes during that time. For example, prototype document sponsors rewrite (restate) their defined contribution plans to include the new regulations and statutory changes and submit them to the IRS for approval in year one. The IRS then uses years two and three to approve the plans—with changes made, if needed—and employers use years four and five to adopt restated plans. In year six, the process begins again.
In addition to restating plan documents every six years, prototype sponsors may have to adopt “good-faith” amendments in years when significant retirement plan changes become effective in the middle of the restatement cycle. For example, in 2018, your organization should have amended its clients’ plan documents to comply with the Department of Labor’s new requirements for denying disability claims. Similarly, your organization will need to amend its clients’ plan documents by December 31, 2021, for the final hardship distribution regulations, and at some future date, for changes due to recent SECURE Act legislation, both of which will be amendments outside of the Cycle Three restatement.
Ascensus Is Here to Help
Through EDDS, Ascensus can take over your block of plans as the prototype document sponsor and provide all of the services that go with it, including call center services to answer document questions, VCP assistance for document failures (additional fee required), restatement and amendment services, and plan establishment services.
Don’t hesitate to contact us at 800-346-3860 or at sales.support@ascensus with any questions you have about EDDS or the Cycle Three restatement. We are here to help.
