Preparing for Cycle 4

Approximately every six years, the Internal Revenue Service (IRS) requires that pre-approved retirement plan documents complete a formal restatement process. This process incorporates legislative, regulatory, and other guidance changes made since the last document update and helps ensure that the plan documents remain aligned with those requirements.

The next restatement cycle for 401(k), profit sharing, and money purchase plans is called Cycle 4 and is scheduled to begin in the fall of 2026 and conclude in the fall of 2028. While the previous restatement (Cycle 3) may still feel recent, timely adoption of the Cycle 4 restated documents is important for maintaining your plan’s tax-qualified status and ongoing compliance.

What Will Cycle 4 Include?

Plan sponsors can expect Cycle 4 to address many changes that have taken place since the prior restatement cycle, including:

      • Expanded hardship withdrawal provisions
      • Long-term part-time employee requirements
      • CARES Act-related changes
      • Certain SECURE and SECURE 2.0 provisions
      • Various IRS guidance and technical corrections

Will Cycle 4 Include All SECURE 2.0 Provisions?

Not necessarily. Because the IRS has only recently issued guidance on many SECURE 2.0 provisions, Cycle 4 documents are expected to include some (but not all) SECURE 2.0 updates. Plan sponsors will still need to adopt interim amendments until these changes can be incorporated into the next restatement cycle.

Notable SECURE 2.0 provisions expected to be addressed in Cycle 4 include:

      • Catch-up contributions: Beginning in 2025, participants ages 60 through 63 are eligible for a higher catch-up contribution limit.
      • Required minimum distributions (RMDs): The RMD starting age has increased to age 73 for certain participants and will increase to age 75 for later birth years.
      • Long-term, part-time employees: Plans can no longer exclude certain long-term, part-time employees from making elective deferrals once they satisfy the applicable service requirements.
      • Involuntary cashout limit: The maximum amount a plan may involuntarily roll over to an IRA for a terminated participant’s account has increased from $5,000 to $7,000.

Understanding Interim Amendments

In addition to the six-year restatement cycle, defined contribution plan documents must be updated periodically through interim or “snap-on” amendments. These amendments help keep plan documents current with statutory and regulatory changes that take effect before they are included in a restated document.  Even with the upcoming Cycle 4 restatement, plan sponsors will need to adopt interim amendments covering all of the provisions of the CARES, SECURE, and SECURE 2.0 Acts by December 31, 2026.

Blue Ridge will reach out to clients in the coming months to outline the steps needed to complete the required interim amendments.

Timing and Next Steps

Plan sponsors should use this time to prepare. They should understand upcoming deadlines, review plan design decisions, and ensure required restatement documents and interim amendments are adopted in a timely manner once they’ve been provided.

Blue Ridge Associates will provide additional information about the upcoming restatement process and related interim amendments in the coming months. In the meantime, if you have any questions about the restatement process or the interim amendments, please contact your Blue Ridge Retirement Plan Consultant.