What is a plan restatement?

A restatement is a re-writing of the adoption agreement. It incorporates changes from any plan amendments that may have been adopted since the last time the document was re-written. Retirement plans must be restated from time to time; however, they are divided into various cycles depending on plan type and document type.

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Why do we have to restate our plan?

Documents are written based on laws and regulations set by Congress, the IRS, and the DOL. As those laws and regulations change, documents must be updated to mirror those changes.  Failure to do so can result in plan disqualification and could subject your company to substantial tax sanctions.

 

Is this a mandatory thing or is it optional?
This is a Government-mandated restatement, it is not optional.

 

Why is this cost not built into my normal fee agreement?
This is an option that we have considered in the past, but the current structure makes more sense for a variety of reasons. We never know exactly when the restatement cycle will begin, so charging a monthly fee may not be fair. Some clients may leave in the middle of a cycle and therefore not need the restatement when it comes due, this would mean they paid for something that they never received. The most logical solution is to charge this fee at the time of restatement.

 

Why does PDC invoice clients before they have completed the actual Restatement?
We do this to ensure that our clients are committed to having PDC handle the restatement. This is a very common TPA practice. Receiving payment before makes sure that all the efforts that go into the restatement won't be wasted time that takes away from other important client services.

 

Do all vendors charge this type of fee?
It can vary based on the type of vendor, but the great majority of Third Party Administration firms charge for this service.  Bundled Recordkeeping vendors may not charge in some situations but this is because they generate large revenue from asset-based fees.  When determining what PDC would charge for this service, we looked at all of our peers and the average fee represented. Our fee is definitely competitive and within industry norms.

 

Whom do I contact if I have more detailed questions?
Your Client Account Manager has in-depth knowledge of this restatement process and can answer any questions that you may have.   

 

How is the new plan document different than our current document? 

The new document has been updated to address updated laws and IRS guidance, including, but not limited to: 

• Rules expanding In-Plan Roth Conversions of otherwise non-distributable amounts. 

• Final regulations providing for a limited modification of the required minimum distribution rules for tax-qualified defined contribution plans holding Qualifying Longevity Annuity Contracts. 

• Clarifying changes relating to the application of same-sex marriage rules. 

• Final regulations providing guidance on mid-year changes to Safe Harbor 401(k) Plans. 

• Qualified Natural Disaster Relief provided by the IRS, including, but limited to, Louisiana storms, Hurricane Matthew, Hurricane Irma, Hurricane Maria, and California Wildfires. 

• Revised disability claims procedures as provided by the Department of Labor (DOL). 

• New rules extending the rollover period for Qualified Plan Loan Offset Amounts.

 

What is the restatement deadline?
The restatement deadline is July 31, 2022.

 

Can we pay for the restatement from plan assets?
Yes. Since the current plan document restatement is required to maintain the plan’s tax-qualified status, the Department of Labor allows the fee to be paid out of plan assets

 

Do I have any options or flexibility with regards to this fee?
Although we cannot negotiate or lower this fee, we are very willing to work with our valued clients and offer flexible options in terms of payment structure. Please contact our Accounts Receivable Department at accounting@plandesign.com or 650-425-7925 to discuss options.