Cycle 3 Restatement: The Time to Act is Now
By Jodie Norquist, CIP, CHSP
If you’re an employer plan sponsor who has received notifications about the Cycle 3 qualified retirement plan restatement but, for whatever reasons, haven’t taken action yet, or if you’ve gone through the restatement process but you’ve forgotten to sign and return documents, this message is for you.
The time to act is now.
If plan sponsors do not sign their Cycle 3 plan document by the IRS-prescribed restatement window, which ends July 31, 2022, then the plan will incur a qualification failure, which may result in adverse tax consequences. July 31 is a hard deadline set by the IRS: the plan’s document effective date and the signature date cannot reflect a later date than this.
In a quandary about what to do next if you haven’t begun the restatement process? Let us help.
First, here’s some background on the Cycle 3 Restatement.
What is Cycle 3 Restatement?
Cycle 3 is a document restatement event, part of a series that occurs every six years. The IRS requires all 401(k), profit sharing, and money purchase pension plans that are using pre-approved documents to be restated onto an updated document. These updated documents must incorporate legislation, regulations, and other items specified by the IRS since the last restatement.
Where Do We Begin if We’ve Done Nothing Yet?
You’ll need to sign a new Cycle 3 plan document, which includes a new adoption agreement and trust agreement, but this restatement is a bit more complicated than past restatements. The new Cycle 3 documents have additional attachments and the IRS now requires all pre-approved plans to include the trust and custodial provisions in a separate agreement.
If you’re not prepared to tackle this process on your own, Ascensus is here to assist you. As a full-service document provider, Ascensus has already processed tens of thousands of Cycle 3 plan restatements in the past year. We’ve streamlined this process by offering “collapsible” documents for our Cycle 3 adoption agreements. This allows your final plan document to reflect in its adoption agreement only the provisions that you’ve elected. Provisions you are not implementing are excluded.
Through our Employer Direct Document Service, our Plan Adoption System (PAS) software, and restatement mailing services, Ascensus can complete your plan document restatement.
Don’t Delay Any Longer—July 31 is Closer Than You Think
The length of time that it takes to complete the Cycle 3 restatement varies, depending on whether you’re an employer plan sponsor who is contacting Ascensus for the first time or if you’re an existing client who already uses our plan documents. Be sure to allow for enough time before the deadline for a complete and accurate restatement.
Don’t Know Where to Start? Give Us a Call
If you need help with the Cycle 3 restatement, don’t hesitate to call us. Contact the Ascensus sales team at 800-345-6363 or customersupport@ascensus.com to find out how we can help you meet the July 31 Cycle 3 retirement plan restatement deadline.
