Cycle 3 Restatements For DB Plans:

Frequently Asked Questions


1. What is the Cycle 3 restatement and why is it required?

A: The Cycle 3 Restatement is a regulatory process mandated by the Internal Revenue Service (IRS) that occurs every six years. It involves updating pre-approved qualified retirement plan documents to align with any changes in laws and regulations that have occurred since the last restatement. This process is crucial to ensure that retirement plans remain compliant with current laws and continue to provide the intended benefits to participants.

2. Is it mandatory to go through the restatement process?

A. Yes, the Cycle 3 restatement is a mandatory requirement set by the IRS for all pre-approved defined benefit plans, including cash balance plans. Timely restatemnt and execution of the plan document are crucial to maintain the pre-approved status of the plan.

3. Can the restatement process be used to make changes to the plan?

A: Absolutely, the restatement process can be an excellent opportunity to make changes to your plan design. As you review your plan for restatement, you may identify provisions that are no longer serving your business or your employees well. The restatement process allows you to update these provisions to better align with your current goals and objectives. AUI is well-equipped to use this opportunity to further tailor fit the plan design to your goals as a plan sponsor.

4. How does AUI support the restatement process?

A: AUI is committed to providing a smooth and efficient restatement process. Our team of experts will guide you through every step, from reviewing your current plan document to executing the restated docuemnt. We’re here to ensure your plan remains compliant and continues to serve your business and your employees effectively.

5. What will be provided with the restatement?

A: The restated plan documents will include a Plan Document, a separate trust agreement, an IRS Opinion Letter pre-approving the plan as tax-qualified, a Summary Plan Description (SPD) that explains the plan to employees in plain language, a board or member resolution to adopt the plan, a loan policy (if applicable) and joinder agreements (if applicable), and any applicable interim amendment. 

6. What if my plan was recently implemented?

A: If your plan document was drafted on or after August 1, 2023, it might already be restated for Cycle 3. Please contact your AUI plan administrator, who will assist in confirming this. If you plan wasn’t drafted or restated onto the Cycle 3 document, it must be restated.

7. What is the deadline to restate?

A: The deadline for restating all tax-qualified defined benefit plan documents (except individually designed plan documents) is March 31, 2025. This is to maintain their pre-approved status.

8. Why am I receiving this notice now?

A: AUI is initiating the restatement process as early as possible to ensure each plan sponsor receives the high-quality service they deserve. Starting early not only helps meet the compliance deadline but also allows plan sponsors an opportunity to discuss potential enhancements and updates to their plan design and provisions with their plan consultant.

9. Can the fees for the Cycle 3 restatement be paid from the trust?

A: Yes, the fees for the restatement process can be paid from the trust. This is because the restatement is considered an administrative expense required to maintain the plan’s tax-qualified status.

10. Do frozen plans need to be restated?

A: Yes, even plans that are currently frozen are required to be restated.

11. I’m terminating my retirement plan. Do I still need to restate the plan document?

A: Yes, the IRS requires a qualified retirement plan to be in full compliance with all applicable legislation upon termination. Restatement gives the plan an opportunity to incorporate the latest plan language in one plan document.

12. What happens if I do not restate my plan within the given timeframe?

A: If you fail to restate your plan within the given timeframe, you risk losing the plan’s pre-approved status. This could have significant and costly tax implications that could potentially disrupt the plan’s operation. It’s crucial to complete the restatement process by the given deadline to avoid these issues.

13. Where do I go if I have more questions? 

A: If you have more questions or need further clarification on any aspect of the restatement process, please don’t hesitate to contact your plan administrator at AUI. Our team of dedicated professionals is always ready to assist you. We understand that the restatement process can be complex and we’re here to make it as smooth and understandable as possible for you. Whether you have questions about timelines, fees, changes to your plan, or anything else related to the restatement, we’re here to guide you and provide the answers you need. Remember, our goal is to ensure your plan remains compliant and continues to serve your business and your employees effectively.