The IRS requires plans that use pre-approved plan documents to be fully restated approximately every six years. These deadlines mark the close of formal restatement cycles. Plans that failed to restate by this deadline and have not corrected the failure risk losing their tax-qualified status.

Plan Restatement and Restoration of Tax-Favored Status

All qualified retirement plans must be established with and operated based on a formal Plan Document that fully complies with the Internal Revenue Code. When laws change, the Plan Document must be amended or restated to comply with the updated laws. In addition to interim or “snap-on” amendments for regulatory changes, the IRS requires plans to be completely restated on a six-year cycle.

Failure to restate the plan by the required deadline may result in the plan’s disqualification. This jeopardizes tax-favored treatment of contributions, earnings, and distributions, and could expose participants to unexpected taxation and the plan sponsor to loss of contribution deductions.

Restoring Tax-Favored Status

The goal is to correct this failure and restore the Plan’s tax-favorable status. This can be accomplished by adopting a restated current cycle pre-approved plan document and filing a submission under the IRS Voluntary Correction Program (VCP), provided the plan is not under IRS examination.

To ensure compliance with recent regulatory and legislative changes, the IRS suggests reviewing the following documents:

• The original Plan Document and Summary Plan Description
• All subsequent amendments and restatements
• Corresponding Adoption Agreements, as applicable
• IRS opinion, advisory, and/or determination letters
• Plan records, including Board of Directors’ resolutions or meeting minutes

The IRS publishes an annual Required Amendments List outlining qualification changes that may require interim plan amendments. Plan sponsors should monitor these updates to stay in compliance between restatement cycles.

VCP Compliance and Correction

After adopting the restated plan document, the Plan Sponsor should file a VCP submission through the IRS Pay.gov portal using Form 14568. A fee applies based on the size of the plan, as outlined in Rev. Proc. 2022-4. The VCP submission must describe the failure and the correction method used. If the IRS approves the VCP submission and compliance statement, it will be signed and mailed back to you. This signed compliance statement serves as proof that the failure was remedied and the plan’s tax-favorable status is restored, unless any other errors are found. Retain this signed compliance statement in your Plan records.

For Assistance with Plan Document Restatements and Corrections

If you need help, contact Ekon Benefits at (314) 367-6555 or info@ekonbenefits.com.

Straight From the Source

IRS’s Voluntary Correction Program webpage: https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-you-havent-updated-your-plan-document-within-the-past-few-years-to-reflect-recent-law-changes

IRS – VCP Submission Procedures: https://www.irs.gov/retirement-plans/voluntary-correction-program-general-description

IRS – Required Amendments List: https://www.irs.gov/retirement-plans/required-amendments-list