IRS Extends Due Date for Certain SECURE Act, CARES Act, and CAA Plan Amendments

The Internal Revenue Service (“IRS”) published Notice 2022-33 on Aug. 3, 2022, extending the deadline for certain SECURE Act, CARES Act, and CAA non-governmental qualified retirement plan amendments until Dec. 31, 2025 (from Dec. 31, 2022). (Note that governmental retirement plans have a different extension, generally until 90 days after the end of the third regular legislative session beginning after Dec. 31, 2023). This welcome extension will allow for more guidance to be published before applicable amendments must be finalized. However, plans still need to amend for applicable CARES Act provisions this year. Even more importantly, this extension is only for amending the plan document, and plan administration must be consistent with the applicable law even before the postponed amendments are adopted.

What Changed?

With this Notice, the IRS has essentially provided a three-year extension on amending plan documents to comply with the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), required minimum distribution provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and provisions for pension plan distribution at age 59 ½ in the Further Consolidated Appropriations Act or Bipartisan Miners Act (“CAA” or “Miners Act”). Despite the postponement of amendment due dates, plans must still operate in compliance with the provisions of the SECURE Act, CARES Act, and CAA as then in effect. Below is a list of some of the more prominent provisions that have a postponed amendment due date:

• SECURE Act provisions increasing to age 72 (from age 70½) the age at which required minimum distributions (“RMDs”) must begin;
• SECURE Act provisions concerning when and how 401(k) and other defined contribution plans make RMD distributions after a participant’s death;
• SECURE Act provisions requiring inclusion of part-time employees who have worked more than 500 hours in three consecutive years;
• Optional SECURE Act provisions permitting in-service distributions for qualified birth and adoption expenses;
• Optional SECURE Act provisions Increasing the maximum automatic enrollment safe harbor percentage to 15% (from 10%) of compensation;
• Waiver of 2020 RMDs pursuant to the CARES Act; and
• Optional reduction of the minimum age (to 59½ from 62) for defined benefit plans for in-service distributions.

Amendments can be made for these and other provisions at any time, but based on Notice 2022-33, plan amendments for non-governmental qualified retirement plans are not required until Dec. 31, 2025.

What Did Not Change?

What did not change due to Notice 2022-33 is also important. Most provisions of the CARES Act still require amendment prior to the end of the current plan year. Specifically, if your plan elected to apply any of the following CARES Act provisions, plan amendments are due by Dec. 31, 2022, for calendar year plans:

• Increased loan limits (to $100,000 from $50,000) during parts of the COVID pandemic;
• COVID-related in-service distributions; and
• Temporary suspension of loan repayments or additional time for loan repayments during part of the COVID pandemic.

What’s Next?

There are three key takeaways:

• Take steps to ensure you are administering your retirement plans in accordance with applicable law.
• Determine if any of the CARES Act provisions require amendment in the current plan year and if so, adopt appropriate amendments before the end of the plan year (i.e. Dec. 31, 2022, for calendar year plans).
• Stay tuned for additional guidance and information on the SECURE Act, CARES Act, and CAA amendments that were postponed until Dec. 31, 2025.

If you have questions or would like additional information, contact a member of our benefits team.