Learn about the 403(b) Cycle 2 restatement, why it matters, and what you need to do. We’re here to help.

What is the Cycle 2 restatement?

The IRS requires all 403(b) retirement plan documents to be updated, or restated, every few years to reflect regulatory and legislative changes. This is known as the Cycle 2 Restatement, which runs from July 1, 2020 through December 31, 2026.

Even if you have not made changes to your plan, adoption of the Cycle 2 document is mandatory.

Why it matters

• Required by the IRS: All 403(b) plans, including non-ERISA plans, must be restated.
• Deadline: December 31, 2026.
• Compliance risk: Failure to restate your plan by the deadline may jeopardize its tax-favored status.

What’s included in the restatement

The Cycle 2 document incorporates:

• IRS regulatory updates.
• Legislative changes (e.g., SECURE Act, CARES Act).
• Updated IRS-approved language for 403(b) plans.

What you need to do

1. Review your Cycle 2 plan document when we provide it.
2. Sign and return the document before the December 31, 2026 deadline.
3. Keep a copy for your permanent plan records.

Impact on participants

• In most cases, there is no impact to how the plan operates or to participants’ accounts.
• If there are any material changes to your plan provisions, you will be notified of any required participant communications.

We’re here to help

Our team will:

• Prepare and deliver the Cycle 2 restatement document to you,
• Guide you through the review and adoption process, and;
• Ensure your plan remains compliant.

Have questions?

Please contact your Worksite Benefit Consultant or reach our team at WEAPlanAdmin@weabenefits.com for assistance.

Q1: What is the 403(b) Cycle 2 restatement?

The IRS requires all 403(b) plan documents to be updated, or “restated,” every few years to reflect changes in laws and regulations. This is known as the Cycle 2 Restatement period, which runs from July 1, 2020 through December 31, 2026.

Q2: Who is required to restate their plan?

All 403(b) plans must adopt an IRS-approved Cycle 2 plan document by December 31, 2026.

Q3: Why is this restatement required if we haven’t made changes to our plan?

The restatement is an IRS compliance requirement. Even if you haven’t changed your plan provisions, your document must be updated to include changes in the law and regulations since the prior restatement (Cycle 1).

Q4: What happens if we do not restate our plan?

Failure to adopt the Cycle 2 restated document by December 31, 2026 may result in your plan losing its tax-favored status, which could have serious tax consequences for both the employer and plan participants.

Q5: What is included in the restated document?

The Cycle 2 document incorporates legislative and regulatory updates issued since the first required 403(b) restatement cycle, such as changes from the:

• IRS regulations,
• Subsequent legislative acts (e.g., SECURE Act, CARES Act, etc.), and;
• IRS procedural updates.

Q6: What is required of us as the plan sponsor?

• Review the updated Cycle 2 plan document when provided.
• Sign and adopt the new document by October 31, 2026.
• Keep a signed copy with your permanent plan records.

Q7: Will participants be affected by this restatement?

In most cases, the restatement does not change how the plan operates for participants. If there are changes that affect plan provisions or participant rights, you will need to communicate those separately.

Q8: How will we know if participant communication is required?

If your restated document includes substantive plan changes (for example, new contribution options, eligibility changes, or distribution features), participants must be notified. WEA Member Benefits will guide you on whether a notice is needed.

Q9: Who will help us complete the restatement?

As your plan document provider, WEA Member Benefits will prepare and deliver the Cycle 2 restatement for your review and signature. Your Worksite Benefit Consultant will also provide guidance on next steps to ensure compliance.

Q10: What should we do now?

Be prepared to review and sign your Cycle 2 restatement document once you meet with your Worksite Benefit Consultant. Don’t wait until the deadline—the earlier the adoption, the smoother the process.

Effective January 1, 2026

Overview

Under the SECURE 2.0 Act, a new requirement takes effect January 1, 2026, impacting certain 403(b) and 401(k) retirement plans. This change affects catch-up contributions for employees age 50 and older whose annual compensation exceeds $145,000 (indexed for inflation).

Key change

Starting in 2026, catch-up contributions above the annual limit must be made as Roth (after-tax) contributions if the employee’s compensation exceeds the threshold.

This means:

• Higher earners making catch-up contributions will contribute on an after-tax basis.
• Contributions grow tax-free, and qualified distributions will be tax-free.

Quick reference

Roth Catch-Up Contribution Provision–Effective January 1, 2026

Q1: What is the Roth catch-up contribution provision?

The SECURE 2.0 Act introduces a requirement that, beginning January 1, 2026, certain catch-up contributions for participants age 50 and older must be made on a Roth (after-tax) basis if the participant’s annual compensation exceeds $145,000 (indexed for inflation).

Q2: Who does this apply to?

This provision applies to:

• Employees age 50 or older who make catch-up contributions.
• Employees whose compensation exceeds $145,000 in a calendar year (indexed annually).

Q3: What are catch-up contributions?

Catch-up contributions allow eligible participants electing to make age 50 and older and/or age 60-63 catch-up contributions to contribute additional amounts above the annual contribution limit for retirement plans.

Q4: What is changing in 2026?

Currently, catch-up contributions may be made as pre-tax or Roth contributions (after-tax) at the participant’s election. Starting January 1, 2026, participants who exceed the compensation threshold will be required to make age-based catch-up contributions as Roth contributions only.

Q5: How will this affect my plan administration?

Plan sponsors will need to:

• Update plan documents to reflect the Roth catch-up requirement.
• Ensure payroll and recordkeeping systems can process Roth catch-up contributions correctly.
• Communicate changes to affected participants.

Q6: Do all participants have to make Roth catch-up contributions?

No. Only participants age 50 and older who exceed the annual compensation threshold are required to make Roth catch-up contributions. Others may still make pre-tax or Roth catch-up contributions under current rules.

Q7: Will this affect the annual catch-up contribution limit?

No. The annual catch-up contribution limit remains the same but will be indexed for inflation. The change affects only the tax treatment of the contribution for eligible participants.

Q8: What are the benefits of Roth catch-up contributions?

• Contributions grow tax-free.
• Qualified distributions are tax-free.
• Gives participants greater tax diversification in retirement.

Q9: What should we do now as a plan sponsor?

• Review your current plan documents and catch-up provisions.
• Work with your payroll provider and recordkeeper to ensure readiness for January 1, 2026.
• Plan participant communications well in advance.

Q10: Where can we get more information?

Your Worksite Benefit Consultant can guide you through the process and provide resources to update your plan documents and communications.