Plan Sponsors – Mandatory 401(k) Plan Restatements

Paul Miloe, CRPS®

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Plan Sponsors – Mandatory 401(k) Plan Restatements

Approximately every 6 years, the IRS mandates that all employers restate plan documents on their qualified plans (401(k), 403(b), defined benefit, etc.).  Due to tax law changes and other factors, many retirement plans will have periodic amendments to their plan document.  The IRS mandates these plan restatements to incorporate the various amendments and new laws into a unified document applicable to all plans.

In IRS Announcement 2020-7, the IRS has confirmed that what is being known as the “Cycle 3” restatement was set to begin August 1, 2020.  Due to COVID, the start date was pushed out and is now underway.  Cycle 3 requires that that all qualified, pre-approved 401(k) plan documents will need to be amended, certified by the IRS, and adopted by the plan sponsor by the deadline of July 31, 2022. This is a mandatory IRS requirement with penalties for non-compliance that can include plan disqualification.  Note that the IRS has a separate cycle for 403(b) and defined benefit plans and those will be dealt with in the future.

If you sponsor a 401(k) plan and work with a Third Party Administrator (TPA), that firm should have contacted you about actions you need to take.  If you have not been contacted, be sure to reach out to your TPA to ensure the process gets started.  The deadline is over a year away, so you have plenty of time.  If you do not have a TPA, you’ll need to work with your asset custodian/recordkeeper that provided your current plan document to see what you need to do to get the restatement completed.  As part of this process, you should review the current elections under your plan to see if any changes or additions should be made.

TPA firms typically charge a restatement fee for this work, so be sure to confirm that as well.  The fee can be paid outright by the plan sponsor but can also be paid via plan assets.

CalSavers – Deadline Reminders

If you are an employer in CA and do not currently offer a retirement plan for your employees, this is a reminder that you will be forced to or face fines beginning at $250/eligible employee.  The regulations currently apply to any employer in CA with 100 or more employees.  Effective June 30, 2021, any employer in CA with 50 or more employees must have a plan in place.  On June 30, 2022, the threshold drops to a mere 5 employees.  If you need help looking at options that could be a good fit for your business and that ensure you are compliant, please know that we’re here to help.  As an employer, you can adopt your own plan or use the new CalSavers plan sponsored by CA.   You can learn more about the CalSavers program at:

Paul Miloe


Paul Miloe has been actively working as a financial advisor with Albitz/Miloe & Associates, Inc. since 1996. He graduated from University of California, Santa Barbara in 1994 with a Bachelor of Science degree. Paul is a Chartered Retirement Plans SpecialistSM. His focus centers on personal and retirement planning, life insurance, annuities, college savings plans, and senior issues, including long-term care insurance. In addition to his role as CCO of our firm, Paul is also a Branch Manager for Cetera Advisor Networks, LLC (member FINRA/SIPC). Paul, and his wife, Mary, are lifelong residents of the South Bay, and along with their two children, and are active in their community via sports, school, and community service.

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Note: For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.