Time Is On My Side: Some Retirement Plan Amendment Deadlines Pushed Back | Holland & Hart – The Benefits Dial

The IRS has given plan sponsors more time to adopt some – but apparently not all – retirement plan amendments reflecting law changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan Miners Act of 2019 (Miners Act) , and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Notice 2022-23, issued August 3, 2022, generally provides that the deadline to adopt these amendments is extended to December 31, 2025. This is the deadline for qualified plans regardless of the plan year, and this deadline also applies to 403(b ) plans and collectively bargained plans. Governmental plans generally have until 90 days after the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023.

Without this extension, the amendments for non-governmental plans would have been due December 31, 2022 (for calendar year plans; the deadline was actually the last day of the first plan year beginning on or after January 1, 2022). It was generally December 31, 2024 for governmental plans previously.

The impact of this guidance is that your plan document does not yet have to be updated to conform to current plan operations that may have changed due to these laws when they went into effect. The amendment will not be considered an impermissible “cutback” even though it is adopted later by the new deadlines. The impacted provisions include: the increase in the required beginning date from age 70-1/2 to age 72 and other changes to the required minimum distribution rules (SECURE Act), in-service distributions at age 59-1/2 in pension plans and 457(b) plans (Miners Act), and suspension of minimum required distributions in 2020 (CARES Act).

The extension will allow Treasury and the IRS to issue guidance – such as finalizing the minimum required distribution regulations – before the deadline. In addition, there is pending retirement plan legislation including “SECURE 2.0” that, if adopted later this year, would also require amendments. It is anticipated that the amendment deadline under that legislation will tie with the new deadlines so the amendments can be adopted all at once.

However, Notice 2022-23 apparently did not extend the deadline to amend plans for changes to loans and in-service withdrawals due to coronavirus (CARES Act); the Notice only modified a specific section of the CARES Act which relates to the suspension of minimum required distributions. Assuming this omission was intentional and the IRS does not issue a revised Notice extending that deadline, plan amendments for all CARES Act provisions other than the suspension still need to be adopted by the previous deadlines.

Some plan sponsors prefer to amend sooner than the deadlines anyway, at least in situations where we are not awaiting guidance. This way the plan document reads as it is actually operated, and participant communications such as Summary Plan Descriptions (SPDs) are updated and comply with current operations. In addition, it can be nice to “check this box” and get this done while the changes are fresh. If the IRS later issues clarifying guidance, you may have to adopt a clarifying amendment; this would also have the retroactive amendment relief as long as it is done by the deadline.

In any case, you may need to adopt other amendments by December 31, 2022:

  • As noted above, the CARES Act provisions other than the suspension of the required minimum distributions still need to be amended.
  • Did you make any discretionary changes to your plan this year (unrelated to the SECURE Act or the CARES Act)? The deadline will generally be December 31, 2022 for amendments.
  • Are you making any changes for 2023 that would be an impermissible “cutback” if you don’t do the amendment in advance? For example, you may not be able to change an allocation formula after the fact.
  • Don’t forget your health and welfare plans, including your cafeteria plans. For example, CARES Act changes to cafeteria plan election changes and changes to qualified medical expenses are due by December 31, 2022 if they were implemented in 2021; this deadline was not extended.

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