In the August Monthly Minute, we explore the IRS' recent announcement delaying the deadline to amend retirement plans for SECURE Act and CARES Act changes.
What's the Rush? IRS Delays SECURE/CARES Act Plan Amendment Deadlines
Earlier this month, the IRS released Notice 2022-33 which extends the deadlines for employers to amend retirement plans to reflect changes under the SECURE Act and CARES Act. Before the extension, amendments were generally due by December 31, 2022. With the extension, plan sponsors of nongovernmental qualified and 403(b) plans must adopt affected amendments by December 31, 2025. With respect to individually designed plans, the Notice indicates that the 2023 Required Amendments List is anticipated to include guidance issued under the SECURE Act. The extended amendment deadlines also apply to interim and discretionary amendments to preapproved qualified plans. While the Notice provides a wholesale amendment extension for SECURE Act changes, it only extends the CARES Act deadline that relates to the 2020 waiver of required minimum distributions (RMDs).
Notably, the following SECURE Act changes, addressed in the February 2020 Legal Alert (and later Monthly Minute newsletters) are impacted by the amendment deadline extension:
- Maximum service conditions for elective deferral purposes for long-term part-time employees
- Increase in maximum automatic enrollment percentage for QACAs from 10% to 15%
- Increase in RMD age from 70 ½ to 72
- Penalty free distributions for birth or adoption of a child of up to $5000
- Requirement for death RMDs to be distributed within 10 years
Only the following CARES Act change is impacted by the amendment deadline extension:
- Waiver of RMD rules for the 2020 calendar year
The CARES Act waiver of the 10% early withdrawal tax in connection with coronavirus-related distributions (CRDs) and the relaxation of participant loan requirements for participants eligible to receive a CRD are not subject to the extended amendment deadline. These CARES Act provisions are described in earlier editions of the Monthly Minute.
KMK Comment: The extended amendment deadline is welcomed news for plan sponsors. However, plans are still required to operationally comply with the relevant SECURE Act and CARES Act provisions as of the applicable effective dates and should work with plan service providers to ensure any other discretionary plan amendments, along with those CARES Act amendments that are not covered by the Notice, are adopted by year end.
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