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Employers who offer 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 documents updated by July 31, 2022.
For all defined contribution pension plans that are documented on a prototype or volume submission document format, the IRS requires plan sponsors to reformulate the plan on pre-approved “cycle 3” form documents updated no later than July 31, 2022. In light of the upcoming deadline, plan sponsors who have not yet signed a “Cycle 3” restatement on their updated document provider documents may wish to promptly contact the document provider 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. Sponsors will therefore be well served if they take the time to carefully review the new documents.
In many cases, the document format or “default” settings may have changed since a plan sponsor’s previous plan documents were created. Simple errors that occur when the wrong box is checked or unchecked can lead to costly operational breakdowns. Plan sponsors can minimize the risk of plan document and transaction errors by carefully reviewing their updated plan documents before signing them.
Stephanie A. Smithey is a shareholder of Indianapolis Office of Ogletree Deakins and Cabinet Co-Chair Benefits and Executive Compensation Practice Group.
Tracy L. Mounts is a paralegal at Indianapolis Office by Ogletree Deakins.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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