The IRS on Aug. 3, 2022, issued Notice 2022-33, which extends the deadlines for qualified retirement plans, 403(b) plans and governmental retirement plans (including 457(b) plans) to adopt amendments reflecting certain optional and required changes under 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 deadline extensions provide welcome relief for plan sponsors, who now generally have until the end of 2025 (or later in the case of governmental plans) to amend their plans to reflect these provisions.
Key Provisions Affected
The SECURE Act, CARES Act and Miners Act amended a number of key provisions under the Internal Revenue Code applicable to employer-sponsored retirement plans. The provisions of the SECURE Act that are affected by the delayed amendment adoption date include:
- an increase in the age when participants must commence required minimum distributions (RMDs) from 70½ to 72
- modification of the rules for RMDs to beneficiaries under defined contribution plans (such as 401(k) or profit sharing plans)
- a requirement that non-collectively bargained 401(k) plans permit part-time employees who complete at least 500 hours of service during each of three consecutive years to have the opportunity to make elective deferrals to the plan (periods prior to Jan. 1, 2021, do not need to be taken into account)
- permitting a plan to allow penalty-free withdrawals for qualified birth or adoption distributions up to $5,000
- an increase in the maximum automatic enrollment safe harbor contribution from 10 percent to 15 percent of eligible pay
The delayed amendment adoption dates also apply to:
- the permitted waiver of RMDs for defined contribution plans for 2020 under the CARES Act
- the permitted reduction in the minimum age for in-service distributions from defined benefit plans from 62 to 59½ under the Miners Act
Under previous IRS guidance, the deadline for nongovernmental qualified retirement plans and 403(b) plans not maintained by a public school to be amended to adopt any of these required or optional changes was the last day of the first plan year beginning on or after Jan. 1, 2022 (e.g., Dec. 31, 2022, if the plan year is the calendar year). Governmental plans – including 457(b) plans, 403(b) plans maintained by a public school and collectively bargained plans – generally had until the last day of the first plan year beginning on or after Jan. 1, 2024 (except that collectively bargained plans were required to adopt the CARES Act RMD waiver, if applicable, by the end of 2022).
Notice 2022-33 extends these deadlines so that nongovernmental qualified retirement plans and 403(b) plans (including collectively bargained plans) now have until Dec. 31, 2025, regardless of whether their plan year is the calendar year, to adopt plan amendments reflecting required provisions and any implemented optional provisions. The deadline for governmental plans (including 457(b) plans) is now 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after Dec. 31, 2023.
Note that any amendment must apply retroactively to the effective date of the applicable provision. (In the case of an optional amendment, the effective date is the date as of which the provision was implemented.) Furthermore, during the period after the effective date but prior to the adoption of any amendment, plans must be operated in good-faith compliance with the law and applicable IRS guidance.
Notice 2022-33 does not extend the deadline under the CARES Act for adopting plan amendments reflecting special COVID-related relief for qualified individuals, such as the ability to take in-service withdrawals, the increased maximum limit on plan loans, the temporary suspension of loan repayments and the additional period for loan repayment after such suspension. Plan amendments adopting those provisions must still be made by the end of the first plan year beginning on or after Jan. 1, 2022 (i.e., Dec. 31, 2022, for calendar year plans).