The July 31, 2022 deadline for defined contribution plans such as 401(k), Profit Sharing, ESOPs, and Money Purchase Plans to be restated is not that far away. You’ll find the details here.
If you miss the deadline to restate your qualified retirement plan, the IRS can disqualify it, and take away all its tax benefits. This means contributions might not be deductible or employees will have them immediately included in income. Therefore, restating your document should be a high priority. The IRS does provide a “late adopter” procedure for employers who missed the deadline to requalify the plan. However, IRS User Fees and additional professional fees make the late adopter procedure substantially more expensive than restating the plan before the deadline.
Now here’s where the Carpe Diem, or Seize the Day!, part comes in. The Restatement will update the plan for all law changes since the last Restatement six years ago.
The 401(k) industry hasn’t stood still either. In the recent years, there have been plan design enhancements, technology improvements, fund changes, provider consolidations, more effective employee communication tools, etc., etc.
Use the required Restatement process as an opportunity to see if you can make your plan better.
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