401(k): Preapproved Plans Restatement Period Begins May 1st

Time flies by, and although it may seem as though your preapproved plan was just updated, the Internal Revenue Service (IRS) has just announced that the second six-year remedial amendment cycle for preapproved defined contribution plans will begin on May 1, 2014. This means that all 401(k) plan sponsors that use a preapproved plan document, which includes a prototype plan document or a volume submitter plan document, will be required to restate their plan between May 1, 2014 and April 30, 2016, using their document provider’s newly updated and approved form document.

The document providers will soon begin receiving IRS approval letters for their updated prototype and volume submitter plan documents, and then the two-year process of helping plan sponsors restate their 401(k) plans will begin.

Action To Be Taken

This guidance is new, and it will take the 401(k) plan document providers a little time to get their processes in place.  However, if you are in the process of making any changes to your 401(k) prototype or volume submitter plan, you should be proactive in asking your document provider about restating your 401(k) plan on their newly approved document.  If you aren’t making any plan design changes, but your document provider doesn’t notify you soon about the restatement requirement, you should proactively follow up with your document provider to discuss the timing for updating your plan document.

If you have indicated that your plan uses a preapproved plan document, the 401(k) Compliancedashboard will send you a reminder about this restatement process.  As with any other compliance activity, you will have the option of “pending” the reminder to a later date.  By using this feature, you can address this issue with your document provider at a time that works for you and the document provider.