IRS Delays Amendment Deadline
Until recently, qualified retirement plans that operate on a calendar-year basis were required to amend their plan documents on or before December 31, 2022, to address the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (“SECURE”) and the Coronavirus Act, Relief, and Economic Security (CARES) Act of 2020. But in late Summer, the IRS issued Notices 2022-33 and 2022-45 that extends the SECURE and CARES deadline for plan document changes to December 31, 2025.[i]
The delay is partly because the IRS has not issued clarifying guidance for some of the SECURE provisions (e.g., beneficiary distribution rules), which may need to be incorporated in the plan amendment.
The Deadlines for these two IRS Notices depend upon the type of retirement plan. Please consider the following:
Qualified Plans
In general, the deadline to amend a qualified plan is December 31, 2025. However, the plan amendment deadline for a qualified governmental plan under Section 414(d) is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, which will vary by plan.
403(b) Plans
In general, the deadline to amend a 403(b) plan that is not maintained by a public school is December 31, 2025. The plan amendment deadline for a 403(b) plan that is maintained by a public school is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, which will vary by plan.
457(b) Plans
The deadline to amend a governmental 457(b) plan is the later of: (1) 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, or (2) if applicable, the first day of the first plan year beginning more than 180 days after the date of notification by the Secretary that the plan was administered in a manner that is inconsistent with the requirements of section 457(b).
IRAs
The deadline to amend the trust governing an Individual Retirement Account (“IRA”) or the contract issued by an insurance company with respect to an IRA that is an individual retirement annuity is December 31, 2025.
Can Combine CARES and SECURE Plan Amendments with Anti-Cutback Relief
Amendments to an eligible retirement plan (including an annuity contract) that reflect the additional year allowed for repayment of loans due to the Coronavirus pandemic (Section 2202 of CARES), may be combined with the other plan changes permissible under CARES and SECURE and still be ERISA compliant. Specifically, a retirement plan will not be considered out of compliance with the anti-cutback rules of ERISA Sections 411(d)(6) and 204(g), if the Plan amendment for the repayment of loans is addressed within the same amendment that other changes pursuant to CARES and SECURE, as long as completed within the timeframes established by IRS Notices 2022-33 and 2022-45.
[i] IRS Notice 2022-33: https://www.irs.gov/pub/irs-drop/n-22-33.pdf & IRS Notice 2022-45: https://www.irs.gov/pub/irs-drop/n-22-45.pdf
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