Important Deadlines for Pre-Approved Retirement Plan Documents

For defined contribution plans that use a document pre-approved by the IRS, the deadline to restate on to the “Cycle 3” version is July 31, 2022. This deadline applies to profit sharing, money purchase, and 401(k) plans. (Defined benefit and 403(b) plans using a pre-approved document are on different cycles.)

The IRS established a six-year cycle for plans on a pre-approved document to amend and restate their plans. The two prior restatement cycles were commonly referred to by major pension legislation that was reflected in the restatement. The prior restatement cycle was commonly known as the PPA restatement for the Pension Protection Act legislative changes that were incorporated into those documents. Because there was no major legislation incorporated in the current round of restatements, most practitioners simply refer to the current restatements as “Cycle 3” since it’s the third restatement since the IRS implemented the six-year cycle.

What about the SECURE Act? Isn’t that legislation part of the Cycle 3 document? The SECURE Act was signed into law in December of 2019, which was after the window closed for the qualified defined contribution document providers to submit their plans to the IRS for review, so Cycle 3 documents do not contain SECURE Act provisions. To remain compliant, qualified plans and 403(b) plans must adopt a “good faith” SECURE Act amendment by Dec. 31, 2022. (Governmental and most union plans have until Dec. 31, 2024.) Many document providers were slow to release SECURE Act amendments hoping that the IRS would provide additional regulatory guidance that could be incorporated into the amendment language. To date, the IRS has not released the anticipated guidance so document vendors are releasing SECURE Act amendments with the warning that operational changes may be required when the IRS eventually provides guidance.

In addition to the SECURE Act amendment, plans that operationally implemented CARES Act provisions during 2020 must adopt a CARES Act amendment by year end. The CARES Act provided pandemic relief by providing expanded distribution and loan options to participants suffering from economic and health challenges due to the pandemic in 2020. Implementing the CARES Act provisions was a discretionary choice for plan sponsors, so only plans that offered the relief must adopt CARES Act amendments by the last day of the 2022 plan year (2024 for governmental plans). CARES Act provisions were available to all qualified plans, 403(b) plans, and governmental 457(b) plans, so any of these plans that implemented CARES Act features must execute a CARES Act amendment.

Qualified defined contribution plan sponsors that do not utilize an individually designed plan document should check to make sure that their plan document is a Cycle 3 document and if not adopted already, be on the lookout for SECURE Act and CARES Act amendments (if applicable). Plans must adopt required restatements and amendments timely to ensure the plans remain qualified. Plans that miss an amendment deadline can utilize the Employee Plans Compliance Resolutions System (EPCRS) correction program to correct the document failure.