by: Tara Giella, QPA, QKA, ERPA
While it may seem like your plan document was just restated, the next defined contribution restatement period is approaching and is expected to begin in 2026. This mandatory process applies to 401(k), profit sharing, money purchase, and 403(b) plans and involves updating plan documents to reflect recent law changes. Restatements occur every six years as part of the IRS remedial amendment cycle.
For 401(k), profit sharing, and money purchase plans, the upcoming restatement, known as Cycle 4, is expected to begin October 1, 2026 and end September 30, 2028. For 403(b) plans, the restatement period, called Cycle 2, will end December 31, 2026.
The new restatement is based on the 2023 Cumulative List and will include legislation from the SECURE Act of 2019, the CARES Act, and the SECURE 2.0 Act of 2022. While there are many changes, some of the key ones include:
Catch-up contributions:
Starting in 2026, these contributions for participants aged 50 and older, whose 2025 FICA wages exceed $150,000 (indexed), must be made on a Roth basis.
Beginning in 2025, the catch-up limit for participants who are ages 60-63 as of December 31st increased to $11,250 (indexed).
Required Minimum Distributions (RMDs): The starting age for RMDs has increased from 70½ to 72 for individuals born on or after July 1, 1949; to age 73 for those born on or after January 1, 1951; and to age 75 for those born on or after January 1, 1959.
Long-Term, Part-Time Employees: Plans can no longer exclude long-term, part-time employees who work at least 500 hours of service annually for two consecutive years from making elective deferrals.
Hardship Distribution Rules: The next restatement will incorporate the updated hardship rules from the Bipartisan Budget Act of 2018. This includes any optional elections adopted on the prior Hardship Addendum as well as the elimination of the six month suspension on contributions.
Involuntary Cashout Limit: The maximum amount a plan can involuntarily cash out for a terminated participant's account has increased from $5,000 to $7,000.
Our clients will be receiving correspondence from us in the upcoming months regarding the restatement process. Ensuring your plan document is restated is mandatory for maintaining the plan’s tax-qualified status. We will work with plan sponsors to make this process as seamless as possible.