The IRS has recently issued to document vendors opinion letter approvals for updated pre-approved defined contribution plan documents. This starts the next cycle of required defined contribution plan document restatements. If you are an employer that currently sponsors a 401(k) plan, profit sharing plan, money purchase plan or ESOP, and the plan document is currently on an IRS pre-approved document, you will need to restate your plan document on a newly approved document on or before July 31, 2022.
Rolling these new documents out to plan sponsors is of course a big undertaking for retirement plan document vendors, and they will be attacking this task in a very systematic way in the coming months so that their adopting employers can meet the deadline. The document vendors play the primary role in the plan restatement process. They will notify plan sponsors when their plan restatement process is scheduled and give plan sponsors a time period to review draft documents with legal counsel, obtain board of director approval, and execute and return the documents. The documents will include the restated plan and usually an updated service agreement.
It is important to keep in mind that the plan sponsor/employer needs to be on top of the process. The plan sponsor is responsible for reviewing, approving and adopting the restatement. The document vendor will usually not accept responsibility for the timely completion of this process or the accuracy and correctness of the documents. Drafting mistakes are not uncommon, so it is critical for employer to not treat the restatement draft as a perfunctory “sign and return” task. The plan sponsor should carefully review the draft to make sure that it is accurate. This process is also an opportunity to compare the plan provisions with the actual administration of the plan and to consider plan design changes. When you receive the draft documents from your document vendor, we strongly urge you to devote adequate time and attention to getting this important task completed.