My recommendation would be to use an Interval cutoff type, instead of Time. The difference is that time cutoff uses periods (fiscal year, monthly, etc...) while Interval is just a straight up interval - so if you had a 3 year interval and the filing date was 1/8/2014 then the cutoff eligibility would be 1/8/2017. This way you wouldn't need to worry about things like preemptively setting the event date two years in the future. Note that the filing date is set on the record folder - you'll see it in record folder properties. That's the date used for determining the cutoff eligibility.

Anyway, you have two cutoff instructions - One for a 3 year interval and one for a 5 year. You set them to 3 years by default (you would do this by having the parent record series use the 3 year instruction, and then all newly created record folders will have that by default), but if the extension happens, you go into the individual record folder properties and change it to the 5 year instruction. Since the filing date is unchanged, it simply pushes the cutoff eligibility date back two years. Which sounds to be exactly what you are looking to do.

One question - does it remain a 7 year archive period in both cases? If so, then you don't even need to touch the retention schedule instructions at all or worry about alternate retention events. Since that 7 years is based on the cutoff eligibility date, changing the cutoff instruction for the record folder will similarly push back the destruction date to match. If it's supposed to be the SAME original destruction date (that is, the extension doesn't change the total time of retention, just the percentage of it pre-cutoff), then I suppose you'll need a second retention schedule as with the cutoff instruction and change both together. But I'm guessing that's not the case.