Employers that provide 401(k) and other defined contribution retirement plans to their employees on plan documents that have been "pre-approved" by the Internal Revenue Service (IRS) must sign updated documents by July 31, 2022.
For all defined contribution retirement plans that are documented on a prototype or volume submitter document format, the IRS requires plan sponsors to restate the plan on updated "Cycle 3" pre-approved form documents by no later than July 31, 2022. In light of the upcoming deadline, plan sponsors that have not yet signed a "Cycle 3" restatement on their document provider's updated documents may want to reach out to the document provider quickly to request updated documents. Due to the complexity of these documents, it is not uncommon for errors to occur when converting from one document to another, so sponsors will be well served to take the time to carefully review the new documents.
In many cases, the format of the documents or the "default" settings may have changed since a plan sponsor's prior plan documents were created. Simple errors that occur when the wrong box is checked or left unchecked may cause expensive operational failures. Plan sponsors can minimize the risk of plan document and operational errors by thoroughly reviewing their restated plan documents before signing them.
Stephanie A. Smithey is a shareholder in the Indianapolis office of Ogletree Deakins and co-chair of the firm's Employee Benefits and Executive Compensation Practice Group.
Tracy L. Mounts is a paralegal in the Indianapolis office of Ogletree Deakins.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
