401(k) plan restatements: What it means for your plan


By The Human Interest Team

Key Takeaways

  • Required by the IRS, 401(k) plan restatements ensure plan documents follow regulatory changes.

  • The current restatement cycle for preapproved plans, called Cycle 3, closes on July 31, 2022.

  • No action is required from current Human Interest clients—we’ll begin restatements shortly.

Retirement plan sponsors deal with a slew of responsibilities, including keeping retirement plan documents updated with legislative or regulatory changes. To ensure plans follow current regulations, every six years, the Internal Revenue Service (IRS) requires qualified retirement plans that use a “prototype” to restate plan documents. A prototype plan is a plan document preapproved by the IRS for use by prototype document sponsors and their clients. As part of the most recent restatement process, the IRS renamed these “preapproved plans.”

The current restatement cycle for preapproved plans—called Cycle 3—began August 1, 2020, and will close July 31, 2022. Plan restatements are required by the IRS by this deadline and businesses that don’t comply may be subject to penalties. Here’s what else you need to know.

Why do employers have to restate their plans?

A 401(k) plan restatement is a complete rewriting of plan documents. 401(k) plan documents are based on laws and regulations enacted by the IRS, the Department of Labor, and Congress. As laws change, documents must be updated. To comply, all retirement plans that use a prototype plan document must update those documents to a newer version that incorporates legislative and regulatory changes that have occurred since the documents were last rewritten. 

Is a 401(k) plan restatement mandatory or voluntary?

The upcoming plan restatement is mandatory, even if you recently amended your plan. Plan sponsors don’t want to miss the July 31, 2022, restatement deadline. Plans that do not adopt a restated plan document will be subject to IRS penalties, which in extreme circumstances, could include plan disqualification.

What’s included in the Cycle 3 plan restatement process?

It’s important to pay attention to timing! Due to the timeline the IRS uses to review and approve plan documents, Cycle 3 plan restatements only include legislative and regulatory changes enacted before February 1, 2017, including:

  • The ability to amend safe harbor 401(k) plans once a year has started

  • Availability of plan forfeitures to offset types of company contributions

  • Expansion of the definition of “spouse” to include those of the same gender

Between February 2017 and now, there have been other significant legislative changes. However, due to this timeline, Cycle 3 plan restatements will not reflect changes that have occured in the last couple of years, including: 

  • Hardship distributions regulations (effective January 2019)

  • SECURE Act (passed in December 2019)

  • CARES Act (passed in March 2020)

Upcoming changes must be addressed in separate, good-faith amendments instead of the Cycle 3 restatement. Even if you’ve amended your plan for hardship withdrawal changes, you will still have to restate your plan. The deadline to amend plans for SECURE Act and CARES Act is the last day of the plan year that begins in 2022. At Human Interest, we never charge fees for plan amendments (more on this below), which can ease the pressure of making these amendments in the future.

What if you just started a brand new plan?

Many document providers only recently started the restatement process for their clients. Before moving to the new Cycle 3 document, providers had to thoroughly review any changes and the impact on their recordkeeping system. Then, they had to set a strategy to restate possibly thousands of client’s plan documents. Depending on where your provider was in this process when you started your plan, you may not have been put on the new Cycle 3 document. 

Regardless, your document provider should know which version of the prototype or preapproved plan was used and notify you if your plan requires a Cycle 3 restatement.

How can employers prepare for the 401(k) plan restatement process?

Plan documentation maintenance is a fiduciary responsibility of the plan sponsor (or plan administrator). That’s why it’s important to understand the Cycle 3 restatement process, as well as your plan document options available. You should know whether your provider will assist you with this restatement process and have it on your radar for completion by July 31, 2022. 

How can Human Interest help with the plan restatement process?

Human Interest will begin the Cycle 3 restatement process for all clients on 401(k) plans in the fall of 2021. Given the volume of requests, we can not tell you specifically when your document is scheduled for restatement—but rest assured it will be completed in time for your review and signature before July 31, 2022, so you can avoid IRS-imposed penalties.

No action is required from current Human Interest clients. We’ll let you know if your plan requires a restatement—and when it’s your plan’s turn, we’ll notify you. Of course, there will be no service interruption or impact on your plan. This is all part of keeping your plan document up to date with IRS requirements. Customers who have recently launched their Human Interest plan will be included in this process if their plan was not originally put on a Cycle 3 document. 

Benefit from zero amendment or restatement fees

According to some sources, restatement fees charged by other 401k providers can cost businesses anywhere between $500 to $2,000. Because of these high fees, some use the restatement process as a time to perform an overall plan redesign. This is primarily done in conjunction with the restatement process to save their clients additional amendment fees. 

At Human Interest, however, we never charge amendment fees or restatement fees. Because of this, there’s no rush to redesign your entire plan right now. Plan sponsors can amend their plan when they want to—not just when they need to—so you can continue to make amendments as you usually do. If you have an amendment pending when we’re in the process of restating your document, we’ll try to incorporate it at that time. Of course, if you have any questions about your plan design when you receive your restated document, we’re happy to discuss and help determine the best method and timing of any changes.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment advising, and integration with leading payroll providers.



LAST UPDATED 03/09/2021General disclosures Human Interest is a turnkey provider of employee retirement plan services to small and medium-sized businesses. Investment advisory services are provided to employee benefit plan clients by Human Interest Advisors LLC, an SEC-Registered Investment Adviser and a wholly owned subsidiary of Human Interest Inc. SEC Registration does not imply a certain level of skill or training.  Human Interest does not provide tax, legal or accounting advice. The content on our website has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult with tax, legal and accounting advisors before hiring any providers for your plan. For information about Human Interest’s pricing, please see refer to our Pricing Page.AccoladesHuman Interest received the titles of "Best Places to Work" and "Best Startup Employer" according to third-parties, the San Francisco Business Times (as of 04/24/2020) and Forbes (as of 04/09/2020 and 03/09/2021), respectively using the following methodology:
  • San Francisco Business Times: All Best Places to Work winners are determined exclusively on the basis of their employees' responses to the Best Places to Work Survey. Employee responses from the 30 standard survey questions, along with the number of employees that respond to the survey, are calculated to determine the company’s overall score and ranking.
  • Forbes: 2020 -- Forbes and Statista selected America’s Best Startup Employers from 10,000 companies based on an innovative methodology evaluating employer excellence in three ways: 1) Employee Satisfaction: extensive research was conducted on ‘Average Length of Employment’, ‘Employee Ratings’, and ‘Quantity of Ratings’, 2) Employer Reputation: a measurement of social media success; company specific information was algorithmically extracted from social media channels such as news sites, micro-blogs, blogs and social networks, and 3) Company Growth: extensive metric calculations were evaluated including ‘Website Traffic’, ‘Job Openings’, ‘Headcount Information’, and ‘Funding Information’.
  • Forbes: 2021 -- To determine the list, Statista identified 2,500 American businesses that had been founded between 2011 and 2018 and employ at least 50 people. All companies considered had been started from scratch and not spun out of existing enterprises. Statista evaluated each organization based on three criteria, the first being employer reputation. The firm reviewed articles, blogs and social media posts pertaining to each employer, searching for specific phrases, such as “corporate culture,” “diversity” and “employee engagement.” Statista then assessed employee satisfaction, evaluating online reviews, as well as growth, examining the organizations’ website traffic and headcounts over a two-year period. The final list ranks the 500 employers that boast the best employer reputations, employee satisfaction and growth.