To maintain reliance on a pre-approved plan document, all qualified plans and 403(b) plans must be restated periodically in accordance with a recurring remedial amendment cycle. For qualified defined benefit plans, that deadline is fast approaching. Pre-approved defined benefit plans are currently in the middle of their restatement cycle and must be restated for the third remedial amendment cycle (“Cycle 3”) no later than March 31, 2025.
Please note that the current Form 5500 now requires plans to report if they are using a pre-approved plan, including the serial number for that plan. Any plan sponsor that has not yet addressed this responsibility should reach out to their plan providers soon to ensure they can meet this deadline.
And, be sure to review (or have counsel review) those restated documents carefully – we often find mistakes or errors in those draft documents when reviewing them for our clients.
For defined contribution plans (including 401(k) plans), the fourth remedial amendment cycle (“Cycle 4”) began on February 1, 2023, with plan sponsors submitting their updated documents to the IRS for approval. Adopters of pre-approved defined contribution plans should expect the Cycle 4 restatement process to start in 2025 or 2026, with a restatement deadline in 2027 or 2028.
Regardless of pre-approved restatement deadlines, discretionary amendments must generally be adopted by the end of the plan year to apply for that year. Some design changes may only be adopted prospectively, so plan sponsors wishing to make changes to their plan for 2025 should start reviewing their options in 2024. Additionally, safe harbor 401(k) plans that want to make changes should consider the timeline to comply with the safe harbor notice requirements, which may be earlier than the end of the year.
All plans must operationally comply with legal changes, even when the deadline to make those changes (such as with the SECURE 2.0 Act) has been delayed.
Action Steps
Plan sponsors should:
Familiarize themselves with required and discretionary changes made by the Acts.
Ensure they operate in compliance with any required changes as of the effective dates provided.
Keep track of optional provisions that are adopted, along with their implementation dates.
Timely adopt required amendments or restatements by the deadline.
If a deadline is missed or an operational failure occurs, promptly correct any failures under the newly expanded Employee Plans Compliance Resolution System (“EPCRS”).
Please contact Boutwell Fay LLP to determine how these changes affect your plan. A Boutwell Fay attorney will be happy to discuss the application of the laws to your plan’s document and operations.
For over 20 years, the attorneys and other professionals at Boutwell Fay have been successfully solving the complex legal puzzles in the areas of employee benefits and ERISA. We have a federal practice in all 50 states.
We are a nationally recognized ERISA law firm with an unquenchable thirst to continue to learn, share, and deeply care for clients.
CA 949-660-0481
NY 332.900.2550