There are several biennial and quadrennial events, like solar eclipses, the Olympics, Leap Years and election years, that people get excited about. But in the retirement world, there’s one recurring event you should get pumped up about: Cycle 3 restatements!
Every 6 years, the IRS requires plan sponsors to restate the plan document that governs how the plan operates, including eligibility, vesting, contribution types, required testing and more. These plan features are what support the plan with efficiency, effectiveness and customized workplace benefits.
July 31, 2022 is the deadline for completing the current Cycle 3 restatements. A lot has happened since the last restatement period, and a few important plan design trends have arisen:
- In-plan Roth conversions
- Lifetime income options
Yet, many plan sponsors have not considering adding these options. This is either due to an “if it ain’t broke, don’t fix it” outlook or plan sponsors are simply unaware of their plan design options.
However, as we approach the deadline, you can be the hero who educates the plan sponsor about Cycle 3 requirements, newer plan design trends and this golden opportunity to enhance the company’s retirement plan. Here’s how.
Get Ahead of The Game
Even with the restatement deadline months away, you might be wondering why you should start thinking about it now. Because the early bird gets the worm. It’s better to be talking about and marketing this topic today than waiting and reacting to plan sponsor and advisor inquiries. The advisors, TPAs and service providers that start broadcasting early about Cycle 3 are going to see their business increase since they are offering proactive solutions to employer concerns that can be put into action now.
Communication is Key
The first step is through education. Strengthen your relationships by explaining what Cycle 3 is, why it’s important, and how this is an amazing opportunity to review the plan design and make any changes that could enhance the plan’s fit. Examples include revising the definition of eligibility, setting up a vesting schedule and adding advanced plan design features, to name just a few.
The first outreach method for effective communication is through email. Send out three emails to your connections that explain:
- what a Cycle 3 restatement is and why it’s important;
- that it creates an opportunity to review the plan design; and
- how the right plan design could improve the plan.
At the bottom of each email, include your contact information and encourage the plan sponsor to contact you. Then partner with the plan’s TPA to review the plan for maximum effectiveness.
Host a Webinar
The next idea is to cohost a webinar. Partner with your preferred TPA and ask them to prepare slides that discuss the significance of Cycle 3, then open the floor for a joint Q&A.
PRO TIP: For maximum exposure, record the webinar and send an email to anyone who couldn’t attend with the recording attached.
After the event, follow up with each attendee and schedule a joint meeting to discuss plan design ideas that could improve the clients’ and interested prospects’ retirement plans.
With an interactive webinar session, you are providing important knowledge to your community while at the same time opening doors for more referrals and an easier Cycle 3 restatement process.
Read more commentary by Rebecca Hourihan here.
Time to Get Social
Most professionals have a LinkedIn profile, so here’s an idea to stand out.
Sticking with our Cycle 3 theme, post a weekly update. To streamline the process, use some of the text from the emails you sent to your contacts or borrow a slide or two from your webinar presentation. Post that information on LinkedIn, explaining that now is the ideal time to review the retirement plan.
Your social audience will appreciate your insights, which will provide opportunities to spark inbound requests for more information.
Even though the deadline isn’t until July 31, 2022, you still want to emphasize urgency. As you talk with plan sponsors, suggest a deadline, such as April 30, 2022. Ask that the first conversations be completed by this date. It will allow everyone time to collect any plan-related information to help understand whether and how the plan design will change.
Remember to loop in the recordkeepers. They will have their own forms, procedures and policies necessary to update their systems.
By giving ample time to complete the restatement and any plan design enhancements, everyone can breathe easier knowing they are working with a professional and competent team.
While it’s easy for TPAs and bundled recordkeepers to send an email with a quick e-signature request, should your clients blindly sign and return it? Cycle 3 is a requirement—but more importantly, it’s an opportunity to deepen the plan’s value.
Show and tell your plan sponsor community why they should partner with your firm. Get in front of employers and partner with your preferred TPA to explain their plan design options. Teach plan sponsors how they can adjust the retirement plan to fit their personal and business goals.
Be the Hero
Cycle 3 is a time to celebrate. It’s a chance to tailor the plan design to align with your plan sponsor client’s goals. Whether it’s maximizing contributions, reducing tax liability or retaining top talent, Cycle 3 is a winning ticket to demonstrate your value. By actively communicating about this upcoming restatement, you can enhance your relationships and deepen trust. When you approach clients proactively, your value is seen, heard and greatly appreciated.
So use this Cycle 3 restatement period as a marketing opportunity to grow your business, deepen relationships and stand out as the expert retirement plan professional in your community.
Thanks for reading and Happy Marketing!
Rebecca Hourihan, AIF, PPC, is the founder and CMO of 401(k) Marketing, which she founded to assist qualified experts operate a professional business with professional marketing materials and ongoing awareness campaigns.