IRS Extends Certain Retirement Plan Amendment Deadlines
Pursuant to Notice 2022-23 (issued on August 3, 2022), the IRS extended the deadline for plan sponsors to adopt required law change amendments under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan Miners Act of 2019 (Miners Act), and the Coronavirus Aid, Relief, and Economic 2022 Security Act (CARES Act) until December 31, 2025 regardless of the plan year that is used by the subject plan.
This new deadline applies to tax-qualified plans, 403(b) plans as well as collectively bargained plans. Governmental plans, whether qualified, 403(b) or 457(b), have a different deadline as detailed in the Notice. Tax-exempt 457(b) plans do not appear to be included in this extension, so we recommend those documents be amended by the initial deadline including the required law change provisions(i.e., December 31, 2022, for calendar plan years).
The previous deadline for these required amendments, absent this recent extension, was December 31, 2022. Some of these required law change amendments subject to the extension include the increase in the required beginning date for minimum required distributions from age 70-1/2 to age 72 and other changes to the required minimum distribution rules (SECURE Act), in-service distributions at age 59-1/2 in defined benefit pension plans and 457(b) plans (Miners Act), and the suspension of minimum required distributions in 2020 (CARES Act).
In brief, the significance of this guidance means that plan documents do not yet have to be updated by the end of calendar year 2022 for required law changes. It is important to note, however, that Notice 2022-23 does not appear to have extended the deadline to amend plans for optional changes that temporarily increased participant plan loan limits and expanded in-service withdrawals due to coronavirus pursuant to the CARES Act, so a plan amendment is still required by December 31, 2022 for plan sponsors that did adopt those optional provisions.
If an employer has adopted a preapproved plan, the preapproved plan sponsor will likely provide a plan amendment covering the optional law changes and, perhaps, the required law changes that are already in operation, but that depends on the discretion of the preapproved plan sponsor.
However, if the employer is sponsoring an individually-designed plan and can control the contents of the plan amendment, it may make sense to adopt a plan amendment that includes provisions covering both the optional and required law changes now instead of waiting until 2025 so as to eliminate the need for multiple amendments relating to these law changes.