1. What Is a Restatement? Why Do I Have to Do This?
Every six years, the IRS requires all qualified retirement plans to update their plan documents to reflect recent legislative and regulatory changes. Some updates are made during the normal course of business through amendments, but others require more substantial rewriting through a formal process known as a "Plan Restatement."
The current two-year restatement window runs from August 1, 2020 to July 31, 2022. Plan restatements are required by the IRS. Those who do not comply may be subject to significant IRS penalties.
2. Do Employees Need to Be Advised about the Plan Restatement?
Yes, employers should provide participants with a new Summary Plan Description (SPD) after restating the plan.
3. Can I Change My Plan Design during a Restatement?
Yes, this is a perfect time to review your plan design. At ISC Financial Advisors, we analyze our clients’ current plan designs and make updates as needed. Items reviewed during this process include:
- Eligibility waiting period - Do we need to shift the period forward or backward?
- Match formula and Safe Harbor elections
- Profit-sharing formula and vesting periods
- Plan fees - Who is paying? Can they be reduced?
- Loan policy
- Retirement age
- In-plan Roth conversions
Many times, we can change the plan design during the restatement period without incurring additional expenses.
4. Is This a Good Time to Evaluate My Plan and Current Providers?
Yes, now is a great time to evaluate your plan and current providers. We use benchmarking reports to help clients with plan design while ensuring they are paying a fair market price for the services rendered.
If you would like a benchmarking report to evaluate your plan’s design and expenses versus the industry, please contact us at 952-835-1560.
Our custom benchmarking report compares your plan to over 100 industry categories. We are happy to provide you this report for free.
A benchmarking report is ideal not only for evaluating how your plan stacks up, but also for keeping in your fiduciary file as part of a prudent plan management process.
Thank you for taking a look and please call or email me with any questions!