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The deadline to adopt required amendments for several types of retirement plans is nearing. As discussed below, sponsors of many types of retirement plans must adopt amendments to reflect required and optional changes to plan operations made by several laws by Dec. 31, 2026.
If you sponsor a retirement plan, you are probably already familiar with the changes made by Division T of the Consolidated Appropriations Act, 2023 (SECURE 2.0 Act) and Divisions M and O of the Further Consolidated Appropriations Act, 2020 (SECURE Act) that came before it. What you may not know is that while many compliance deadlines associated with these laws have already passed, the IRS allows plan sponsors to wait until later to formally update their plan documents. In fact, SECURE 2.0 included a provision to consolidate the deadline to amend plan documents for several different laws—SECURE 2.0 Act, SECURE Act, Coronavirus Aid, Relief and Economic Security Act (CARES Act), Bipartisan American Miners Act of 2019 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
Which types of plans are included in that Dec. 31, 2026 deadline? Included are single-employer qualified plans like 401(k) plans and traditional defined benefit pension plans. Also included are 403(b) plans, which are sometimes also referred to as tax-sheltered annuity plans, sponsored by certain 501(c)(3) tax-exempt organizations, e.g., nonprofits (but see below about governmental 403(b) plans).
Not everyone must amend by December. The deadline to amend a collectively bargained plan is not until Dec. 31, 2028, and if you have a governmental plan, for example, a 403(b) plan sponsored by a public school, you can wait until Dec. 31, 2029 (but you don’t have to)!
There are several important changes for which plans may need to amend. This discussion won’t cover them all, but a few of note are an increase in the age when employees must begin to take benefits (RMD age), a requirement that “catch-up” contributions of high earners be made on a Roth basis, higher catch-up contribution limits for participants ages 60-63, an increased cash-out limit of $7,000 for small balances and changes to eligibility rules for long-term part-time employees.
Next Steps
If you haven’t initiated a conversation with your plan document provider, benefits counsel, and third-party administrator about the amendment process, now is the time to do so. Exactly what needs to be amended will depend on the terms of your plan and whether you made optional changes allowed by these new laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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