Solo 401(k) Restatement: Understanding IRS-Mandated Plan Updates

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What is a Solo 401k Restatement?

Restating a Solo 401(k) plan means updating the plan document to include new laws and regulations. This occurs when the IRS issues a mandatory update to the plan document or when significant legislative changes impact the plan. Generally, the IRS sets a deadline for restatement, requiring plan sponsors to adopt the updated language within that timeframe.

It's important for plan holders to stay updated on any changes in tax laws and regulations that could potentially impact their Solo 401(k) plan. We strongly recommend working with qualified professionals to make sure your plan remains compliant.

Who is Responsible for Restating the Plan Document?

Your current Solo 401(k) provider or plan sponsor will provide a timeline for the restatement process and plan amendment deadline. However, it's your responsibility to make sure your plan is restated timely. If your provider is providing the plan update, you are responsible for reviewing the updated plan document. You will sign the updated document to confirm the data is accurate and reflects your plan's terms and provisions.

What Happens if I Don't Update My Plan Document in Time?

Make sure you update your plan on time. Missing the restatement deadline could trigger the IRS to disqualify your retirement account. A resulting penalty for missing the deadline could be that your contributions will no longer be deductible or that the funds already in the account can be distributed creating a taxable event. Furthermore, for a Roth 401k, future earnings will lose their tax-favored status.

Lastly, it is possible to evoke a late adopter procedure for a missed deadline. However, you should expect to pay hefty fees set by the IRS.


Do I still Need to Restate my Plan if I Recently Opened my Solo 401(k)?

Even if you just opened a Solo 401(k) with a freshly stated plan, it still needs to be updated every six years or in accordance with new law changes. The IRS keeps this cycle uniform without exclusions, regardless of your plan’s inception date. Plans that were bought and adopted by Solo 401(k) clients umbrellaed under "Cycle 3" do not need to be restated.

It's important to note that specific procedures and responsibilities may vary depending on the provider, custodian, or plan sponsor. Therefore, it's recommended to consult with your Solo 401(k) provider or plan sponsor to understand the exact process and requirements for restating your plan document.

Save Time and Money Restating Your Solo 401(k)

As a small business owner you already have a ton on your plate. Lets go over the few keys steps you can take to make the process smooth as possible.

First, you'll want to do some research and find a plan provider that offers the features and benefits you're looking for. This could include things like low fees, automatic plan restatements, a wide range of investment options allowed, and excellent client service. Take the time to compare different providers and read reviews to ensure you're making the best choice for your retirement plan.

Once you've found your plan provider, you'll need to establish an account. This typically involves filling out some paperwork and providing your current plan provider with the necessary information or resignation to change providers.

Let IRAR Help with Your Solo 401(k) Plans and Restatement Needs

At IRAR, Solo 401(k) Plan Restatements are part of our service and do not incur any extra fees—and they are done automatically and timely. This is just one of the many ways we strive to help our clients make the most of their retirement savings accounts.

Book a free demo of our groundbreaking Solo 401(k) platform to learn how you can save time and money restating your Solo 401(k).

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