The IRS recently issued two notices (Notice 2022-33 and Notice 2022-45) which delayed the date for the adoption of many qualified retirement plan amendments, including most of those impacting 401(k) plans. As discussed in our prior alert, absent these notices, most 401(k) plans needed to be amended by the end of 2022 to remain in documentary compliance.
Based on this IRS guidance, plan sponsors have more time to adopt amendments to incorporate: (i) the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") COVID-related distribution and plan loan increase and suspension provisions, (ii) the 2020 required minimum distribution (“RMD”) waiver, and (iii) Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”) provisions (including the change in RMD commencement age to 72, from 70.5).
The new date for adoption of these amendments is generally December 31, 2025 (for non-governmental plans). It is anticipated that final regulations and further changes to RMD provisions/ages might be forthcoming. We are hopeful that any deadline for adopting these regulations will coincide with the new updated deadline for the statutes themselves, making it possible to adopt everything in a single amendment.
While plans must still be maintained in operational compliance with these law changes (back to 2020 in many instances), formal plan document amendments do not need to be adopted before year end 2022.
A few caveats:
- Plans that are maintained on a pre-approved document (such as a prototype or volume submitter) may have different adoption dates mandated by the document provider, which may pre-date the legally required deadline.
- Tax-exempt 457(b) plans are not expressly covered by the relief granted by these Notices. Accordingly, these plans may remain subject to a December 31, 2022, amendment deadline.
- The deadline applicable to governmental plans is tied to the legislative sessions of that government body; these plans generally have until 90 days after the end of the third regular legislative session beginning after December 31, 2023, to adopt compliant plan amendments.
- While the IRS’s extensions provide welcome relief, plan fiduciaries should carefully consider their fiduciary duties, ERISA’s disclosure obligations, and their participants’ needs in developing a communication strategy for the complicated new rules that apply under the SECURE Act.
Of course, these Notices do not delay the deadline for adoption of discretionary (voluntary) plan amendments not tied to a recent law change. Thus, if the design of a plan was modified effective during the year, an amendment tracking that discretionary amendment still must be adopted by the last day of the plan year that includes the amendment’s effective date (i.e., December 31, 2022).