As 2023 comes to an end, we are pleased to present our traditional End of Year Plan Sponsor “To Do” Lists. This year, we present our “To Do” Lists in four separate SW Benefits Updates. Part 1 covered health and welfare plan issues, Part 2 covered the annual cost-of-living adjustments, this Part 3 covers qualified plan issues, and Part 4 will cover executive compensation issues. Each SW Benefits Update provides you with a “To Do” List of items on which you may want to take action before the end of 2023 or in early 2024. As always, we appreciate your relationship with Snell & Wilmer and hope that these “To Do” Lists help focus your efforts over the next few months.

For your convenience, we have broken this “To Do” List into four categories. 

All Qualified Plans “To Do” List

• Adopt Design Changes by the End of the Plan Year: If an employer made any design changes during the year, the plan generally must be amended to reflect those design changes by the last day of the 2023 plan year (i.e., December 31, 2023, for calendar year plans). 

• Consider the Required Amendments Lists: Each year, the Internal Revenue Service (“IRS”) publishes a Required Amendments List (“RA List”) that includes the changes in qualification requirements that are first effective in the year in which the IRS publishes the RA List. Employers generally have until the end of the second year following the year in which the IRS releases the RA List to make the required amendments. The 2020 and 2021 RA Lists, which still are applicable, contain changes to qualification requirements that affect certain plans.  As part of Notice 2022-62, the IRS published the 2022 RA List, but it did not include any entries listing required changes. 

• Consider the Operational Compliance List: The IRS provides an Operational Compliance List to help employers identify changes in qualification requirements that may require mandatory or discretionary amendments to plans or that may contain other significant guidance that affects plan operation. The Operational Compliance List was last updated in February 2023 and is available only on the IRS website, here. Employers should review the Operational Compliance List and consider whether any plan amendments are required.

• Consider Changes Made by the SECURE Act and SECURE 2.0: The Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”) was enacted on December 20, 2019, and the SECURE 2.0 Act of 2022 (“SECURE 2.0) was enacted on December 29, 2022. Both the SECURE Act and SECURE 2.0 have numerous provisions affecting qualified retirement plans. While several provisions of the SECURE Act and SECURE 2.0 are effective now or will become effective in 2024, plan sponsors are only required to operationally comply with the SECURE Act and SECURE 2.0 now. The deadline to amend plans has been extended until December 31, 2025, for most calendar year non-governmental and collectively bargained plans. Employers should continue to review this legislation to identify what provisions apply to their plans and what amendments, if any, will be necessary to implement these provisions. For more information, see our August 12, 2022 SW Benefits Blog, "IRS Extends Amendment Deadline for Certain Qualified Plan Amendments." 
  • Delay in Age for RMDs. SECURE 2.0 further increased the age to start taking required minimum distributions (“RMDs”) from qualified retirement plans. The age increased to age 73 in 2023 and eventually will increase to age 75.  This increased age provision phases in over time, with the final adjustment taking effect in 2033. 

• Consider Department of Labor Cybersecurity Guidance: In response to the increased risk of cybersecurity threats to retirement benefits, the Department of Labor (“DOL”) provided guidance that is intended to help plan sponsors, plan fiduciaries, recordkeepers, and plan participants address cybersecurity risks. The DOL provided three forms of cybersecurity guidance:
  • Tips for Hiring a Service Provider, which is directed at plan sponsors and plan fiduciaries and provides tips on the manner in which they can ensure that their service providers have strong cybersecurity practices and monitor their service providers’ activities.  
  • Cybersecurity Program Best Practices, which is directed at plan fiduciaries, recordkeepers, and other service providers and provides best practices for implementing and maintaining a cybersecurity program and guidance for plan fiduciaries seeking to ensure they make prudent decisions when hiring service providers.
  • Online Security Tips, which is directed at plan participants and provides tips for reducing the risk of fraud and loss to retirement accounts. It is clear that the DOL continues to perceive cybersecurity issues as a significant threat to retirement plan benefits and seeks to ensure that plan sponsors, plan fiduciaries, and recordkeepers are taking appropriate steps to address these issues. The DOL has requested fairly detailed cybersecurity information from employers whose retirement plans are under DOL audit. Employers should consider reviewing the DOL cybersecurity guidance to determine what changes, if any, they need to make to their current cybersecurity programs. Employers also should consider reviewing their current service provider agreements to discern whether they adequately address the issues identified in the DOL guidance. Finally, employers should consider sharing the DOL’s Online Security Tips with their retirement plan participants. 

• Update Summary Plan Description if Needed: Summary plan descriptions must be updated once every 5 years if the plan has been amended during the 5-year period, and once every 10 years for other plans.

• Take Action to Locate Missing Participants: Missing participants continue to pose challenges to plan administrators and continue to be an area of focus for the DOL and the IRS. Plan administrators should consider taking steps to locate missing participants and should also consider adopting missing participant procedures to address measures the plan administrator will take to locate missing participants.

• Consider Plan Corrections: SECURE 2.0 expands the ability for plan sponsors to self-correct plan errors using the IRS’ correction program, the Employee Plans Compliance Resolution System (“EPCRS”). Plan sponsors should consider reviewing their plans for failures and determining whether the failures may be self-corrected under this expanded program. For more information, see our June 20, 2023 SW Benefits Blog, "SECURE 2.0 Expands Self-Correction Under EPCRS."

Defined Contribution Plans (Including Section 401(k) Plans) “To Do” List

• Comply with Items on All Qualified Plans “To Do” List: The items on the All Qualified Plans “To Do” List also apply to defined contribution plans, including Section 401(k) plans.

• Consider Changes Made by SECURE 2.0:
  • Automatic Enrollment and Escalator Requirements for New Section 401(k) Plans: SECURE 2.0 requires that any Section 401(k) plan that is newly established on or after December 29, 2022 (a “New Section 401(k) Plan”) satisfy certain automatic enrollment and automatic escalator requirements for plan years beginning after December 31, 2024.  This requirement does not apply to Section 401(k) plans that were in existence before December 29, 2022, or to plans sponsored by certain new and small businesses.  Under SECURE 2.0, a New Section 401(k) Plan must include an initial automatic enrollment amount of at least 3% but not more than 10%. For each year thereafter, this amount must increase until it reaches 10% but not more than 15%. Employers that have implemented a New 401(k) Plan or that are considering doing so should work with counsel to ensure compliance with these requirements.
  • Roth Catch-Up Contributions: SECURE 2.0 imposes a new requirement that certain catch-up contributions to Section 401(k) and similar defined contribution plans be made on an after-tax Roth basis.  This requirement applies to participants who are age 50 or older and who earn more than $145,000 in wages from their employer in the prior year.  SECURE 2.0 defines “wages” for this purpose to mean “wages” as defined in Section 3121(a) of the Code.  The effective date for this requirement is January 1, 2024.  However, given the implementation challenges and outstanding interpretation questions, the IRS provided plan sponsors with a two-year administrative transition period to implement the SECURE 2.0 Roth catch-up rule in Notice 2023-62.  Plan sponsors now have until January 1, 2026 to implement the new rule.  For more information, see our August 28, 2023 SW Benefits Blog “IRS Delays Roth Catch-Up Contribution Requirement.” In spite of this extension, employers with plans that permit catch-up contributions should consider the operational changes necessary to implement Roth catch-up contributions and continue to work with their service providers to prepare for this change.  
  • Increased Catch-Up Contribution Limits for Older Participants: Effective January 1, 2025, SECURE 2.0 adds a special catch-up contribution limit for plan participants who are ages 60 to 63.  More specifically, participants who are age 60, 61, 62 and 63 in a plan year are permitted to make catch-up contributions in an amount equal to the greater of $10,000 or 150% of the standard catch-up contribution amount for 2024. The $10,000 will be adjusted annually for inflation. A participant who attains age 64 during the plan year cannot make the increased catch-up contributions for that plan year.  Employers should consider working with their service providers to prepare to implement these increased catch-up limits.  They add complexity to plan administration and likely will require significant lead time.
  • No Required Minimum Distributions for Roth Accounts: Beginning with the 2024 taxable year, participants are no longer required to take required minimum distributions from Roth accounts in qualified retirement plans. This rule aligns Roth accounts in qualified plans with the rules for Roth IRAs. A participant who is required to take a required minimum distribution for the 2023 year still must take the required minimum distribution from the Roth account, even if the distribution is not paid until 2024.
  • Increased Cash-Out Limits: SECURE 2.0 increases the maximum amount that may be involuntarily cashed out of a qualified plan from $5,000 to $7,000 for distributions made after December 31, 2023. This is an optional change, so plan sponsors should consider whether they want to adopt this change and, if so, the effective date for such change.
  • Determine how to Track Hours of Service for Long-Term Part-Time Employees: Prior to the SECURE Act, Section 401(k) plans could limit plan participation to employees who attained age 21 and completed at least 1,000 hours of service during a 12-month period. Under the SECURE Act, long-term part-time employees must be eligible to make salary deferrals to a Section 401(k) plan once they have: (1) reached age 21, and (2) worked at least 500 hours in 3 consecutive 12-month periods. SECURE 2.0 further revised this requirement to permit long-term part-time employees to be eligible to make salary deferrals to a Section 401(k) plan once they have (1) reached age 21, and (2) worked at least 500 hours in 2 consecutive 12-month periods. Starting on January 1, 2024, the SECURE Act rule applies, so long-term part-time employees who worked 500 hours in each year between 2021 and 2023 will be eligible to participate.  The SECURE 2.0 rules take effect in 2025, and long-term part-time employees who worked at least 500 hours in 2023 and 2024 will be eligible to participate.  The IRS recently issued proposed regulations on these requirements, which are available, here.
  • Student Loan Section 401(k) Plan Match: SECURE 2.0 permits employers that sponsor Section 401(k) plans and similar defined contribution plans to amend their plans to treat an employee’s qualified student loan payments (“QSLPs”) as pre-tax, Roth or after-tax elective deferrals and make matching contributions on these amounts. An employee’s QSLP, together with the employee’s elective deferrals, if any, during the plan year cannot exceed the Code Section 402(g) limit (or, if less, the employee’s Code Section 415 compensation). SECURE 2.0 defines QSLP to mean an employee’s repayment of a “qualified education loan” for the higher education expenses of the employee, the employee’s spouse or an individual who was the employee’s dependent when he or she incurred the debt. Employers are permitted to offer the QSLP match to any employee who is eligible to participate in the plan, even if the employee is not contributing to the plan. Employers that intend to offer matching contributions on QSLPs during the 2024 or 2025 plan years are required to amend their plan by the end of the first plan year beginning on or after January 1, 2025 (2027 for government and collectively bargained plans). Employers should consider whether to amend their plans to provide for this benefit and begin working with service providers to identify the changes necessary to implement the benefit. 
  • Consider Adopting Additional SECURE 2.0 Changes in the Future: SECURE 2.0 includes a number of additional optional provisions that are effective now or in 2024 including penalty-free emergency distributions, terminal illness distributions, and domestic abuse distributions. Many recordkeeping platforms are in the process of making these optional provisions available to plan sponsors, so plan sponsors should consider whether they want to make any of these optional provisions available in the future. 

• Consider Changes Made by the SECURE Act: As described in our 2022 End of Year Plan Sponsor “To Do” List (Part 3) Qualified Retirement Plans, the SECURE Act made a number of changes that are applicable to qualified plans. Plan sponsors should review these changes to determine whether they want to make any of the optional changes permitted by the original SECURE Act that are applicable to defined contribution and/or Section 401(k) plans. 

• Make Required Minimum Distributions: As described above, SECURE 2.0 further delayed the required beginning date for individuals who attain age 72 in 2023 or later. Plan administrators should make 2023 required minimum distributions by December 31 for all participants who have attained their required beginning date, taking into account the delayed required beginning date provided by the SECURE Act.

• Consider Extended Deadline for Amending Plans to Reflect Implementation of CARES Act Relief: The CARES Act waived required minimum distributions for defined contribution plans for any distribution that was required to be made in calendar year 2020. The CARES Act also provided increased retirement plan loan limits and provided relief for plan loan repayment in some instances. In addition, the CARES Act provided hardship distributions for coronavirus-related distributions. The IRS previously issued a sample amendment to assist plan sponsors in making the required minimum distribution changes described above. For more information, see our March 27, 2020 SW Benefits Update, “The CARES Act and Defined Contribution Plans: A Brief Summary for Plan Sponsors.” The deadline for amending plans to include CARES Act changes originally was December 31, 2022. In Notices 2022-33 and 2022-45, the IRS extended the deadline to incorporate CARES Act changes for most non-governmental plans and collectively bargained plans to December 31, 2025.  

• Provide Section 401(k)/401(m) Safe Harbor Notice for Plans that Use Matching Contributions by December 2, 2023, for Calendar Year Plans: If a plan has a Section 401(k)/401(m) matching contribution safe harbor, the plan administrator must provide the safe harbor notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023, for calendar year plans). 

• Provide Annual Automatic Enrollment Notice by December 2, 2023, for Calendar Year Section 401(k) Plans: If a plan has an automatic contribution arrangement, an eligible automatic contribution arrangement (“EACA”), a qualified automatic contribution arrangement (''QACA''), or any combination thereof, the plan administrator must give an annual automatic enrollment notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023 for calendar year plans).

• Provide Annual Qualified Default Investment Alternative Notice by December 2, 2023, for Calendar Year Plans: If a plan is relying on the QDIA safe harbor, the plan administrator must give an annual notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023 for calendar year plans). 

• Provide Participant Fee Disclosure Information: Plans are required to provide to participants and beneficiaries on an annual basis a comparative chart of detailed investment-related information about the plan’s designated investment alternatives. DOL guidance requires this information to be provided at least annually. Model charts are available on the DOL website at www.dol.gov. 

• Provide Participant Benefit Statements: Defined contribution plans must provide individual benefit statements at least annually, although plans that permit participants to direct the investment of their accounts must provide the statement at least quarterly. Defined contribution plans also must provide the statement upon request. 

• Distribute Summary Annual Report: Plan administrators should distribute a summary annual report, which is a summary of the information reported on the Form 5500. The summary annual report is generally due nine months after the plan year ends. If the Form 5500 was filed under an extension, the summary annual report must be distributed within 2 months following the extended date on which the Form 5500 was due. 

• If Adding Qualified Automatic Contribution Arrangement or Eligible Automatic Contribution Arrangement for 2023, Adopt Amendment Before the 2023 Plan Year: Neither a QACA nor an EACA may be adopted mid-year. Accordingly, if an employer wishes to add a QACA or an EACA to its plan for the 2023 plan year, it must adopt an amendment by December 31, 2023, for calendar year plans. 

• Update Prospectus if Needed: Reporting issuers of equity securities that have registered securities under a defined contribution plan or interests in the plan must update the prospectus to reflect any material changes to the plan information during any period in which offers, or sales are being made. Material changes should be disclosed in a prospectus or an update or supplement that is delivered to participants before the effective date of the change.  

Defined Benefit Plans “To Do” List

• Comply with Items on All Qualified Plans “To Do” List: The items on the All Qualified Plans “To Do” List also apply to defined benefit plans.

• Make Required Minimum Distributions: As described above, SECURE 2.0 further delayed the required beginning date for individuals who attain age 72 in 2023 or later. Plan administrators should make 2023 required minimum distributions by December 31 for all participants who have attained their required beginning date, taking into account the delayed required beginning date provided by the SECURE Act.

• Post Portions of Form 5500 on Company’s Intranet: A plan sponsor of a defined benefit plan that maintains an intranet website for the purpose of communicating with employees (and not the public) is required to post portions of the defined benefit plan’s Form 5500 on the intranet.

• Comply with Annual Funding Notice to Participants: Single employer defined benefit plan sponsors must provide participants with an annual notice of the plan’s funding status within 120 days of the end of the plan year to which the notice relates. Plans with fewer than 100 participants do not have to provide the notice until the Form 5500 annual report is due for the plan year.

• Comply with Participant Notice Requirement if Adjusted Funding Target Attainment Percentage is less than 80%: In addition to the annual funding notice described above, Section 101(j) of ERISA requires a plan administrator to provide a notice to participants if the plan is subject to any restrictions on the payment of benefits. These restrictions become applicable if the plan’s adjusted funding target attainment percentage or AFTAP is less than 80%. Plan administrators are not required to provide this notice to participants and beneficiaries who are in pay status.

• Provide Participant Benefit Statements: Plan administrators of defined benefit plans should provide individual benefit statements every three years or upon request. Alternatively, plan administrators of defined benefit plans may satisfy the requirement by annually notifying participants that the pension benefit statement is available and how they may obtain such statement.

• Provide Suspension of Benefits Notice, if Applicable: If required by the terms of the plan, plan administrators must provide notice of the suspension of benefits to participants who continue employment beyond normal retirement age and to rehired retirees. This notice should be given during the first month during which the benefit is suspended.

Section 403(b) Plans “To Do” List

• Review 2023 Plan Limits: Please see our description of this issue under “All Qualified Plans ‘To Do’ List” above.

• Consider Preparing to Seek a Determination Letter under the Expanded Determination Letter Program for Section 403(b) Plans.  The IRS issued Revenue Procedure 2022-40 on November 7, 2022, which, among other things, implements a determination letter program that permits Section 403(b) Plan sponsors to seek IRS review of their plan documents.  Under Revenue Procedure 2022-40, an individually designed Section 403(b) Plan can apply to the IRS for a determination letter for initial plan qualification and on plan termination and in certain other circumstances that the IRS identifies in future guidance.  Section 403(b) Plans seeking an initial determination letter will be eligible to file on a staggered three-year schedule (June 1, 2023, June 1, 2024, and June 1, 2025) based on the last digit of the plan sponsor’s employer identification number or EIN. 

• Consider Changes Made by SECURE 2.0:
  • Automatic Enrollment and Escalator Requirements for New Section 403(b) Plans: SECURE 2.0 requires that any Section 403(b) plan that is newly established on or after December 29, 2022 (a “New Section 403(b) Plan”) satisfy certain automatic enrollment and automatic escalator requirements for plan years beginning after December 31, 2024. This requirement does not apply to Section 403(b) plans that were in existence before December 29, 2022, or to plans sponsored by certain new and small businesses. Under SECURE 2.0, a New Section 403(b) Plan must include an initial automatic enrollment amount of at least 3% but not more than 10%. For each year thereafter, this amount must increase until it reaches 10% but not more than 15%. Employers that have implemented a New Section 403(b) Plan or that are considering doing so should work with counsel to ensure compliance with this requirement.
  • Roth Catch Up Contributions: SECURE 2.0 imposes a new requirement that certain catch-up contributions to Section 403(b) plans and similar defined contribution plans be made on an after-tax Roth basis.  This requirement applies to participants who are age 50 or older and who earn more than $145,000 in wages from their employer in the prior year.  SECURE 2.0 defines “wages” for this purpose to mean “wages” as defined in Section 3121(a) of the Code.  The effective date for this requirement is January 1, 2024; however, given the implementation challenges and outstanding interpretation questions, the IRS provided plan sponsors with a two-year administrative transition period to implement the SECURE 2.0 Roth catch-up rule in Notice 2023-62.  Plan sponsors now have until January 1, 2026, to implement the rule.  For more information, see our August 28, 2023 SW Benefits Blog “IRS Delays Roth Catch-Up Contribution Requirement.” In spite of this extension, employers with plans that permit catch-up contributions should consider the operational changes necessary to implement Roth catch-up contributions and continue to work with their service providers to prepare for this change.  
  • Increased Catch-Up Contribution Limits for Older Participants: Effective January 1, 2025, SECURE 2.0 adds a special catch-up contribution limit for plan participants who are ages 60 to 63.  More specifically, participants who are age 60, 61, 62 and 63 in a plan year are permitted to make catch-up contributions in an amount equal to the greater of $10,000 or 150% of the standard catch-up contribution amount for 2024. The $10,000 will be adjusted annually for inflation. A participant who attains age 64 during the plan year cannot make the increased catch-up contributions for that plan year.  Employers should consider working with their service providers to prepare to implement these increased catch-up limits. They add complexity to plan administration and likely will require significant lead time.
  • Increased Cash-Out Limits: SECURE 2.0 increases the maximum amount that may be involuntarily cashed out of a qualified plan from $5,000 to $7,000 for distributions made after December 31, 2023. This is an optional change, so plan sponsors should consider whether they want to adopt this change and, if so, the effective date for such change.
  • No Required Minimum Distributions for Roth Accounts: Beginning with the 2024 taxable year, participants are no longer required to take required minimum distributions from Roth accounts in qualified retirement plans. This rule aligns Roth accounts in qualified plans with the rules for Roth IRAs. A participant who is required to take a required minimum distribution for the 2023 year still must take the required minimum distribution from the Roth account, even if the distribution is not paid until 2024.
  • Determine how to Track Hours of Service for Long-Term Part-Time Employees: The new SECURE 2.0 requirement that long-term part-time employees be eligible to make salary deferrals once the employee has (1) reached age 21, and (2) worked at least 500 hours in 2 consecutive 12-month periods also applies to Section 403(b) plans. Section 403(b) plans must already comply with the universal availability rule for salary reductions, so it appears that the SECURE 2.0 rule will come into play only when one of the limited exceptions to the universal availability rule applies. This rule does not apply to non-ERISA Section 403(b) plans.  
  • Student Loan Section 403(b) Plan Match: SECURE 2.0 permits employers that sponsor Section 403(b) plans and similar defined contribution plans to amend their plans to treat an employee’s QSLPs as pre-tax, Roth or after-tax elective deferrals and make matching contributions on these amounts. An employee’s QSLP, together with the employee’s elective deferrals, if any, during the plan year cannot exceed the Code Section 402(g) limit (or, if less, the employee’s Code Section 415 compensation). SECURE 2.0 defines QSLP to mean an employee’s repayment of a “qualified education loan” for the higher education expenses of the employee, the employee’s spouse or an individual who was the employee’s dependent when he or she incurred the debt. Employers are permitted to offer the QSLP match to any employee who is eligible to participate in the plan, even if the employee is not contributing to the plan. Employers that intend to offer matching contributions on QSLPs during the 2024 or 2025 plan years are required to amend their plan by the end of the first plan year beginning on or after January 1, 2025 (2027 for government and collectively bargained plans).  This change is optional.  Employers should consider whether to amend their plans to provide for this benefit and begin working with service providers to identify the changes necessary to implement the benefit. 
  • Expansion of Hardship Withdrawals: SECURE 2.0 modifies the hardship withdrawal rules for Section 403(b) plans.  Effective for plan years beginning after December 31, 2023, Section 403(b) plans may allow participants to make hardship withdrawals from non-elective and matching contributions, including earnings on such contributions, and also from earnings on elective deferrals. Plan sponsors that want to allow participants to receive hardship distributions from these sources should consider amending their Section 403(b) plans accordingly.  SECURE 2.0 also simplifies the administration of hardship distributions by allowing Section 403(b) plan administrators to rely on a participant’s self-certification regarding both the type and amount of the financial need, unless the plan administrators have direct knowledge to the contrary. This change is effective for plan years beginning after December 31, 2022.   
  • Consider Adopting Additional SECURE 2.0 Changes in the Future: SECURE 2.0 includes a number of additional optional provisions that are effective now or in 2024 including penalty-free emergency distributions, terminal illness distributions, and domestic abuse distributions. Many recordkeeping platforms are in the process of making these optional provisions available to plan sponsors, so plan sponsors should consider whether they want to make any of these optional provisions available in the future. 

• Consider Changes Made by the SECURE Act: As described in our 2022 End of Year Plan Sponsor “To Do” List (Part 3) Qualified Retirement Plans, the SECURE Act made a number of changes that are applicable to qualified plans. Plan sponsors should review these changes to determine whether they want to make any of the optional changes permitted by the original SECURE Act that are applicable to defined contribution and/or Section 403(b) plans.

• Make Required Minimum Distributions: As described above, SECURE 2.0 further delayed the required beginning date for individuals who attain age 72 in 2023 or later. Plan administrators should make 2023 required minimum distributions by December 31 for all participants who have attained their required beginning date, taking into account the delayed required beginning date provided by the SECURE Act.

• Consider Extended Deadline for Amending Plans to Reflect Implementation of CARES Act Relief: The CARES Act waived required minimum distributions for defined contribution plans for any distribution that was required to be made in calendar year 2020. The CARES Act also provided increased retirement plan loan limits and provided relief for plan loan repayment in some instances. In addition, the CARES Act provided hardship distributions for coronavirus-related distributions. The IRS previously issued a sample amendment to assist plan sponsors in making the required minimum distribution changes described above. For more information, see our March 27, 2020 SW Benefits Update, “The CARES Act and Defined Contribution Plans: A Brief Summary for Plan Sponsors.” The deadline for amending plans to include CARES Act changes originally was December 31, 2022. In Notices 2022-33 and 2022-45, the IRS extended the deadline to incorporate CARES Act changes for most non-governmental plans and collectively bargained plans to December 31, 2025.  

• Provide Safe Harbor Notice by December 2, 2023, for Calendar Year Plans: If a Section 403(b) plan uses an ACP contribution safe harbor, the plan administrator must provide the safe harbor notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023, for calendar year plans).

• Provide Annual Automatic Enrollment Notice by December 2, 2023, for Calendar Year Plans: If a Section 403(b) plan is subject to ERISA and has automatic deferrals, the plan administrator must give an annual automatic enrollment notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023 for calendar year plans).

• Provide Annual Qualified Default Investment Alternative Notice by December 2, 2023, for Calendar Year Plans: If a Section 403(b) plan is subject to ERISA and the plan is relying on the QDIA safe harbor, the plan administrator must give an annual notice at least 30 days, but not more than 90 days, before the beginning of each plan year (i.e., December 2, 2023, for calendar year plans).

• Provide Participant Benefit Statements: Section 403(b) plans that are subject to ERISA must provide individual benefit statements at least annually, although plans that permit participants to direct the investment of their accounts must provide the statement at least quarterly. Plans must also provide the statement upon request.

• Distribute Summary Annual Report: Section 403(b) plans that are subject to ERISA must distribute a summary annual report, which is a summary of the information reported on the Form 5500. The summary annual report is generally due nine months after the plan year ends. If the Form 5500 was filed under an extension, the summary annual report must be distributed within 2 months following the extended date on which the Form 5500 was due.

• Provide Participant Fee Disclosure Information: Plans are required to annually provide to participants and beneficiaries in individual account plans a comparative chart of detailed investment-related information about the plan’s designated investment alternatives. DOL guidance requires that this information be provided at least annually. Model charts are available on the DOL website at www.dol.gov.

• Ensure Compliance with the Universal Availability Rules: Noncompliance with the universal availability (“UA”) rules is a common defect in Section 403(b) plans. The UA rules ensure that if an employer allows one employee to make salary deferrals, the employer offers the same opportunity to all employees, with certain exceptions. The IRS requires that the plan provide each employee with an “effective opportunity” to participate, which is determined by all of the facts and circumstances, including notice of eligibility, the period of time during which an election may be made, and any other conditions on elections.

• If Adding an Actual Contribution Percentage Contribution Safe Harbor for 2023, Adopt Amendment Before the 2023 Plan Year: Actual contribution percentage ("ACP") contribution safe harbors may not be adopted mid-year. Accordingly, if an employer wishes to add an ACP contribution safe harbor to its Section 403(b) plan for the 2023 plan year, it must adopt an amendment by December 31, 2023, for calendar year plans.

• Comply with Form 5500 Reporting Requirements: Section 403(b) plans that are subject to ERISA must comply with standard Form 5500 filing requirements, including an annual plan audit for large plans (i.e., plans with 100 or more participants) and detailed financial information for small Section 403(b) plans (i.e., plans with fewer than 100 participants).