Procrastinators Rejoice: IRS Extends Most SECURE Act and CARES Act Amendment Deadlines

Morgan Lewis - ML Benefits

The Internal Revenue Service (IRS) provided a late summer gift to retirement plan sponsors by extending some year-end plan amendment deadlines. In Notice 2022-33, the IRS extended the remedial amendment deadlines for certain Setting Every Community Up for Retirement Enhancement Act (SECURE Act) provisions (including the MINERS Act provision lowering in-service retirement age for pension plans from age 62 to age 59½) and Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provisions. This extension is particularly helpful for retirement plan sponsors hoping for additional guidance before amending plans to reflect certain SECURE Act changes (for example, the mandatory long-term part-time employee participation provisions and the new age 72 required minimum distribution rules).

A remedial amendment deadline is the date by which retirement plan sponsors must adopt retroactive amendments to reflect law and regulatory changes. In connection with the remedial amendment deadline, the IRS often, as was done for the SECURE Act changes, provides anti-cutback relief for the amendment if adopted by the remedial amendment deadline, provided that operation of the plan was consistent with the amendment on and after the effective date of the amendment.

Before Notice 2022-33, the deadline for many SECURE Act, MINERS Act, and CARES Act amendments was the last day of the first plan year beginning on or after January 1, 2022 (or on or after January 1, 2024, for governmental plans and collectively bargained plans). This meant that the remedial amendment deadline for calendar year nongovernmental retirement plans and 403(b) plans was December 31, 2022.

Under Notice 2022-33, the remedial amendment deadline has now been extended as follows for the retirement plan provisions in the SECURE Act (including the MINERS Act) generally and for the CARES Act provisions waiving the required minimum distributions for defined contribution plans and IRAs:

  • Qualified nongovernmental retirement plans and nongovernmental 403(b) plans, including collectively bargained plans, now must be amended by December 31, 2025.
  • Qualified governmental retirement plans and 403(b) plans must be amended by 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 must be amended by 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) the first day of the first plan year beginning more than 180 days after the plan receives notice by the US secretary of labor that the plan was administered in a manner inconsistent with the requirements of Section 457(b).

Notably, the IRS did not extend the remedial amendment deadline for the optional provisions of the CARES Act, which addressed things like COVID-19-related in-service distributions and increased loan limits for COVID-19-related loans. Consequently, these provisions—to the extent they were implemented by a plan sponsor—must be adopted by amendment no later than the last day of the first plan year beginning on or after January 1, 2022 (December 31, 2022, for calendar year plans).

In Notice 2022-33, the IRS indicates that it expects retirement plan sponsors will be able to adopt all SECURE Act, MINERS Act, and CARES Act amendments on a single date. Plan sponsors that have not yet adopted SECURE Act, MINERS Act, and CARES Act amendments should review their plan documents to understand their amendment requirements and how the new remedial amendment deadline affects them.

Given the length of time between initial implementation and formal plan amendment (particularly for the CARES Act required minimum distribution waiver), plan sponsors that wait to adopt the changes should consider documenting how the plan is administered to help ensure that the amendments will be drafted consistent with the plan’s administration.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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