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Every six years, the IRS requires that plan sponsors using a pre-approved document must amend that document and have it restated. This process ensures that sponsors are using a plan document that has been updated to reflect recently enacted legislative and regulatory changes. The current amendment and restatement period for defined contribution plans (known as “DC Cycle 3”) incorporates any changes prior to February 1, 2017. Most importantly, the deadline for compliance is July 31, 2022. Failure to properly amend documents by this deadline can lead to plan disqualification resulting in an immediate income tax liability.

For advisors, the approaching July 31, 2022 deadline offers several opportunities to reengage plan sponsors and investment committees. Perhaps the first step is to help ensure the process goes as smoothly as possible. Find out from document service providers how and when clients will receive communications regarding the amendment and restatement process. Also, confirm whether the adoption agreement will already be prepopulated to reflect the plan’s existing elections (i.e., “signature ready”). In cases where a new adoption agreement must be completed, more time will likely be needed to complete the process.

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