401(k) Plan Restatement Cycle

Written by True Tamplin, BSc, CEPF®

Reviewed by Editorial Team

Updated on March 12, 2023

401(k) plans (as well as other retirement plans) must be "restated" in order to remain up to date with the IRS.

According to the IRS, the restatement cycle for 401(k) plans lasts "every 5 years for individually designed plans, or 6 years for pre-approved plans."

At the end of the cycle, all 401(k) plans must be completely rewritten from scratch in order to incorporate all of the changes in the tax and other guidelines that were legislated throughout the cycle.

Interim amendments should be made to 401(k) plans as necessary to keep up with rule changes, but a plan restatement is still necessary at the end of the restatement cycle.

This helps the plan to stay current with tax and other legal changes to the plan without becoming overburdened with amendments.

401(k) Plan Administrator

The 401(k) plan administrator is responsible for restating the plan, and it must keep detailed records of every restatement, every amendment and any other change or modification to the plan since its inception.

If a plan is audited, the IRS will require this information, and administrators that do not have all of the required records may enter into a voluntary correction program that allows them to correct and/or update their books for a fee that is considerably less than the penalty that the IRS would otherwise charge for being out of compliance.

Again, 401(k) plans that use a prototype document (or pre-approved plan) to govern the plan have restatement cycles lasting for six years.

Plans that have been individually designed generally have a restatement cycle of five years.

Amendments must be made to both types of plans during their respective cycles in order to remain compliant.

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401(k) Plan Restatement Cycle FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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