On August 3, 2022, the IRS issued Notice 2022-23 which extended the deadline for Employers to adopt certain amendments to their qualified plans, 403(b) plans, and governmental plans, resulting from recent legislation including the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the Bipartisan American Miners Act of 2019 (Miners Act). The Notice gives Employers until December 31, 2025 to adopt the amendments retroactively to the provision’s effective date. Governmental plans generally have longer. Without the extension, the amendments for non-governmental plans would have been due by the last day of the first plan year beginning on or after January 1, 2022 (December 31, 2022 for calendar year plans). The deadline was generally December 31, 2024 for governmental plans. Despite when the plan amendments are due to be adopted, plans must be operated in accordance with the new provisions by their effective date, even if not yet in the plan document!
CARES Act Provisions.
Notice 2022-33 does not extend the deadline under the CARES Act for adopting plan amendments reflecting special COVID-related relief for qualified individuals involving loans and in-service withdrawals. The Act allowed plans to offer such individuals the ability to take COVID-related in-service withdrawals, increased the maximum limit on plan loans to $100,000 or 100% of the vested account balance, allowed for the temporary suspension of loan repayments and an additional period for loan repayment after such suspension. Plan amendments adopting these provisions must still be made by the end of the first plan year beginning on or after Jan. 1, 2022 (Dec. 31, 2022 for calendar year plans).
The CARES Act provision permitting the waiver of RMDs for defined contribution plans for 2020 is eligible for the extended adoption date.
SECURE Act Provisions.
The provisions of the SECURE Act that qualify for the extended deadline include:
- The increase in the age for commencing required minimum distributions (RMDs) from 70½ to 72;
- The modification of the rules for RMDs to beneficiaries under defined contribution plans;
- The requirement that 401(k) plans permit long term part-time employees (those that complete at least 500 hours of service during each of three consecutive years beginning January 1, 2021) to have the opportunity to make elective deferrals to the plan;
- Permitting a plan to allow penalty-free withdrawals for qualified birth or adoption distributions up to $5,000; and
- The increase in the maximum automatic enrollment safe harbor contribution from 10 percent to 15 percent of eligible pay.
Miners Act Provision.
The Miners Act permitted a reduction in the minimum age for in-service distributions from defined benefit plans from age 62 to age 59½ to align it with defined contribution plans. This provision need not be adopted until December 31, 2025.
The extension gives the IRS more time to issue guidance on these changes in the law and maybe even model amendments. In general, it is a welcome extension. However, it would be nice if all the CARES Act provisions were extended. However, we may get some additional retirement plan provisions in legislation before the end of the year (e.g., SECURE 2.0). If enacted that legislation is also likely going to require amendments that could be tied to the December 31, 2025 deadline.