What do you choose as a plan’s restatement date?

[Peter Gulia]

An IRS-preapproved plan’s adoption agreement has a fill-in for the effective date of the cycle 3 restatement.

(But that date does not apply to a provision for which the basic plan document, the adoption agreement, an “addendum”, or something else in the IRS-preapproved documents specifies a special effective date.)

Imagine the user’s plan has for decades used the calendar year for the plan year, limitation year, and other provisions.

If in July 2022 a user specifies a date on the fill-in for the general restatement date, what would you choose:

July 31, 2022?

July 1, 2022?

January 1, 2022?

Something else?

What is your reasoning for the restatement date you choose?

[Bri]

Wait, what date did THEY fill in as the general restatement date, then?

Normally I'd be using the first of the year the plan is restated, unless I had anything that definitely was different in terms of when the plan operated that way.  

Most Cycle 3 Plan Overhauls (C3POs) are going to end up with a 1/1/22 effective date in my case.

[Peter Gulia]

Bri, thanks.

Anyone with a different outlook?

Because everything in a preapproved document states provisions that were already in effect years ago, I'm not seeing a reason for or against any imaginable fill-in for the restatement date.

Or is there some point about how to use these documents that I'm too dense to understand?

[Bird]

14 hours ago, Bri said:

Wait, what date did THEY fill in as the general restatement date, then?

Normally I'd be using the first of the year the plan is restated, unless I had anything that definitely was different in terms of when the plan operated that way.  

Most Cycle 3 Plan Overhauls (C3POs) are going to end up with a 1/1/22 effective date in my case.

We also use the first day of the year in which the restatement occurs. We use FTW and that's what is generally recommended by them. Honestly I don't think it matters as long as it is not after the deadline (i.e. you could use 7/1 if that's the date it was signed). The effective dates of the required changes are buried in the doc. 

[Peter Gulia]

Ed Snyder, thanks.

[Bill Presson]

We almost always use the first day of the plan year whether that's retroactive for the current year or a few months ahead for the new year. If there are specific changes made to the plan, then we'll use special effective dates.

What I don't want to happen is to have to look at two plan document to see what impacted the plan for a year.

[EBP]

This is a question every cycle. For the last restatement cycle, IRS allowed you to use a retroactive effective date OR the the first day of the plan year in which the restatement was signed. (We were told that directly by the volume submitter coordinators.) That was a little confusing. We mostly used the latter except for a couple of particular cases where there was a compelling reason to go back six years.

When we had our nonstandardized plan approved by IRS for this cycle, they specifically said that the restatement effective date could NOT be earlier than the first day of the plan year in which the restatement was signed. In fact, we were required to add that as a parameter in the document. So, for calendar year plans, the ones we restated last year were effective 1/1/21 and the ones we restated this year were effective 1/1/22. We've found that for changes in the document that were previously covered by an interim amendment, there's no need for a special effective date in the restatement. For clients who are adopting new provisions in 2022, we add the effective date to the pre-approved language. IRS has said that adding an effective date to a provision is not considered to be a modification to the pre-approved language. For example, we have a client on a calendar year plan who is adding Roth deferrals effective 7/1/22. The restatement is effective 1/1/22 but we inserted a 7/1/22 effective date for the Roth deferral provisions.   

[Peter Gulia]

EBP, thank you for this wonderfully helpful information.