Compliance News | September 29, 2022

IRS Extends Time to Amend Retirement Plans

The IRS has extended the deadlines by which retirement plans must be amended to comply with provisions in several laws passed in the last few years. No amendment for the covered provisions will be required before December 31, 2025. In addition, the IRS is extending anti-cutback relief for most, but not all, of these amendments.

Both the extended amendment date and the anti-cutback relief are conditional on the plan operating from the retroactive amendment effective date to the actual amendment date in accordance with the amendment.

This insight, first published on August 8, 2022, was updated on September 29, 2022 to reflect new guidance from the IRS.

Young Businessman Sitting Alone In The Office With His Hands Behind His Head In Relief

Background

The provisions receiving the relief are provisions of the following acts:

  • Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act),
  • Bipartisan American Miners Act of 2019 (Miners Act)
  • Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
  • Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act)

There is no anti-cutback relief for the elimination of any distribution form pursuant to the waiver of the 2020 required minimum distribution (RMD), nor is there relief for disaster amendments under the Relief Act. All others have cutback relief.

We discussed the SECURE Act in our March 4, 2020 insight and the impact of the CARES Act on retirement plans in our March 30, 2020 insight.

IRS Notice 2020-68 and Notice 2020-86 specified deadlines for adopting amendments relating to certain provisions of the SECURE Act and the Miners Act, and IRS Notice 2020-50 and Notice 2020-51, respectively, addressed the CARES Act provisions on distributions and loans and the CARES Act provision on the waiver of the 2020 RMD.

The revised deadlines from the 2022 notices are in the tables that follow.

The House of Representatives has passed and two Senate committees have reported out bills that would extend the amendment dates as part of new legislation that’s informally referred to as SECURE 2.0, as we discussed in our July 25, 2022 insight, “SECURE 2.0 Would Change the RMD Rules, Corrections and More.”

With SECURE 2.0 not likely to be enacted before the “lame duck” session late this year, if at all, the IRS is providing administrative delays that would coordinate with the proposed amendment dates in SECURE 2.0.

The extended deadlines for all amendments but CARES Act 2020 RMD waiver amendment

The table below shows the new deadlines as provided in Notice 2022-33 which was issued on August 3, 2022 and Notice 2022-45, which was issued on September 26, 2022. Note that there are no special collectively bargained plan rules under the new amendment deadlines.

 

Plans New Amendment Deadline
Private sector qualified and 403(b) plans December 31, 2025, regardless of the plan year, and whether collectively bargained
Governmental qualified plans 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
403(b) plans not maintained by a public school December 31, 2025, regardless of the plan year and whether collectively bargained
Governmental 457(b) plans

Later of:

  • 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
  • The first day of the first plan year beginning more than 180 days after the IRS notifies the plan that it was administered in a manner inconsistent with the Internal Revenue Code, if applicable

The extended deadlines for CARES Act 2020 RMD waiver amendments

The table below shows the deadlines for the 2020 RMD waiver provision of the CARES Act as changed by Notice 2022-33.

 

Plans New Amendment Deadline
Non-governmental plans December 31, 2025, regardless of plan year and whether collectively bargained
Governmental plans other than 457(b) plans 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
Governmental 457(b) plans

Later of:

  • 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
  • The first day of the first plan year beginning more than 180 days after the IRS notifies the plan that it was administered in a manner inconsistent with the Internal Revenue Code, if applicable

Action items

The extended amendment dates are welcome news. If the IRS had not acted, sponsors would have had to choose between amending now or hoping that the SECURE 2.0 extension was enacted this year before amendments were due.

If a plan wishes to make an amendment not addressed by Notice 2022-33 or Notice 2022-45, the general rule that any discretionary amendment increasing benefits must be made by the last day of the plan year and can be retroactive to a date no earlier than the first day of the plan year continues to apply.

Even though the amendment dates have been delayed, plans still must be operated in accordance with each provision’s effective date. Some plan sponsors may find it easier to administer their plans if the plans are amended now and then amended again later, if needed.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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