A Comprehensive Plan Document Service for Complex Times
By Lisa Haberman, MBA/MAM
The concept of working has an entirely new spin as the global pandemic (COVID-19) forced people in nearly every industry to re-think how to get things done. The changes in where we work and how we communicate have driven work processes and systems to be nimbler and more flexible. Retirement plan administration is no exception. You may have found it a challenge to manage everyday plan administration pre-COVID and now the Cycle 3 restatement has been added to the mix. Fortunately, Ascensus is uniquely positioned to provide you with the tools you need to streamline the Cycle 3 restatement process in today’s remote work environment.
Restatement—What Is It?
The IRS requires that all qualified retirement plans be established and supported by a formal written document that complies with the Internal Revenue Code. Employers may choose to use a pre-approved plan offered by a document sponsor, like Ascensus. These pre-approved plan documents are required by the IRS to be restated every six years. The current six-year cycle, known as Cycle 3, requires all defined contribution plan sponsors to adopt the Cycle 3 pre-approved plan documents by July 31, 2022.
Cycle 3 Characteristics
The Cycle 3 qualified retirement plan restatement differs from previous restatement cycles in several ways. Changes have been made to accommodate IRS requirements, allow for new options, and to provide greater clarity and ease of use. In addition, several interim, good-faith amendments will be required this year and next. As an example of change, language in the Cycle 3 adoption agreements was modified to add clarity and consistency to the inclusion or exclusion of “post-severance compensation” for plan purposes. The IRS has also required that in Cycle 3 documents, the trust and custodial provisions be removed from the body of adoption agreements and provided in an entirely separate document.
The Cycle 3 restatement documents incorporate legislative and statutory changes made to qualified retirement plans before February 1, 2017. Therefore, the more recent changes resulting from legislation passed after the rewrite of the Cycle 3 documents was finalized, such as the Bipartisan Budget Act (2018), the SECURE Act (2019), and the CARES Act (2020), will need to be addressed by separate, good-faith interim amendments to the Cycle 3 restatement document.
From Complexity to Compliance
Ascensus can help you seamlessly navigate qualified retirement plan administration with the Employer Direct Document Service (EDDS). This service allows you to customize and maintain consistently compliant documents at any stage of the qualified retirement plan document life cycle. Through EDDS, Ascensus will become the document sponsor for your plans, thus relieving your administrative burdens regarding document compliance. Ascensus also provides plan sponsors remote access as plan documents are delivered through a secure web-based platform that allows for electronic signatures. EDDS allows you to focus on your clients while our experts concentrate on the IRS-required document sponsorship duties, ongoing document maintenance, and ever-changing document compliance.
As part of the Cycle 3 pre-approved document program, the IRS now permits “collapsible” adoption agreements. This added flexibility allows document sponsors to provide adopting employers with plan documents and participant notices that contain only the content relevant to the provisions that apply to the adopting employer’s plan—essentially providing each employer with a customized plan document.
To maximize the flexibility that became available with the new Cycle 3 documents, Ascensus has developed an even more robust version of its document generation system—the Plan Adoption System (PAS)™—and paired it with a compliance-packed plan design builder. The plan design builder captures plan design data through a series of questions to dynamically generate the content in the plan documents and accompanying participant and plan sponsor notices. If you need help creating a custom Cycle 3 document, our PAS software will guide you step-by-step in establishing a new plan or amending an existing plan.
Ascensus also offers affordable mailing services to assist in delivering complete Cycle 3 restatement kits to your adopting employers. This will take the guesswork out of identifying which forms and notices you need to provide to your adopting employers. Ascensus will print and mail you complete versions of the applicable qualified retirement plan documents so that all you have to do is assemble the kits and mail them to your plans. (For an additional fee, Ascensus can also take care of mailing the kits directly to the adopting employers.)
Contact the Ascensus sales team at 800-345-6363 or customersupport@ascensus.com to learn more about EDDS, PAS software, or restatement mailing solutions.
Plan Adoption System™ is a trademark of Ascensus, LLC.
