Happy Spring from the K&C ESOPs & Employee Benefits practice group. We’ve compiled a short list of employee benefits updates from the first quarter of 2022. Please feel free to contact us if you would like to discuss them in more detail.
401(k) Plan Restatement and Amendment Reminder
Sponsors of pre-approved 401(k) plans probably are aware that we are nearing the end of another six-year “restatement” cycle mandated by the IRS. As a result, all pre-approved 401(k) plan documents must be entirely updated for the so-called “Cycle 3” restatement by July 31, 2022. The update is required even if you haven’t changed any terms of the plan, and is unrelated to the recent legislation discussed below. If you sponsor a pre-approved plan and have not heard from your plan document provider, it’s important to contact them to ensure the restatement is in process. Failing to complete the restatement by the deadline will result in IRS penalties.
Additionally, most plans will also require two separate amendments by the end of 2022. These amendments will update plan documents for the SECURE Act (December 2019) and the CARES Act (March 2020). The SECURE Act covered several topics such as raising the required minimum distribution age to 72, changing the required minimum distribution rules to eliminate “stretch” distributions for most beneficiaries, allowing qualified birth or adoption distributions, allowing more flexibility for safe harbor 401(k) plans, allowing 401(k) deferrals by “...
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