Certified Plan Sponsor Professional (CPSP) Practice Exam

How often must an IRS pre-approved plan be restated?

1. Every 3 years

2. Every 5 years

3. Every 6 years

4. Every 10 years

The correct answer is: Every 6 years

An IRS pre-approved plan must be restated every 6 years. This requirement ensures that the plan remains compliant with the latest legislative changes and modifications in the tax code. The restatement process gives plan sponsors the opportunity to incorporate updates that may affect plan provisions, compliance practices, and participant rights. Regularly restating these plans helps maintain their qualified status, which is essential for the tax advantages associated with retirement plans. This periodic reassessment ensures that the plan aligns with current regulations and best practices for retirement savings, ultimately benefiting both the plan sponsor and the plan participants. The 6-year cycle is also significant because it corresponds to various IRS initiatives that drive compliance and avoid potential disqualification of the plans, thus safeguarding the interests of participants.