401(K) CURRENT EVENTS: IRS EXTENDS DEADLINE FOR AMENDING PLANS TO COMPLY WITH SECURE & CARE ACTS

On August 3, 2022, the IRS issued Notice 2022-33 extending the deadline for amending retirement plans, including 401(k) plans, to comply with the applicable provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) and the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”).

Background – SECURE and CARE Acts.

The SECURE Act, signed into law on December 20, 2019, represented the most comprehensive group of changes to the private retirement plan system (including 401(k) plans) since 2006. Not long thereafter, and in response to the COVID-19 crisis, the CARES Act was enacted, containing a host of retirement provisions aimed at helping to ease the financial impact of the health crisis. For more details about these regulations, please review our articles:

• Congress Finally Passes Secure Act – The Most Sweeping Pension Legislation in Over a Decade is Now Law
• How Will The SECURE Act Affect Me? Highlights of Some of the Top New Provisions Affecting 401(k) Plans and
• How Will The SECURE Act Affect Me? Highlights of Some of the Top New Provisions Affecting 401(k) Plans (PART TWO).
• Congress Passes CARES Act In Response to COVID-19 Crisis, Contains 401(k) Ease-of-Access and Other Provisions

Plan Amendments Required in response to Changes in Applicable Law.

When the laws regarding qualified 401(k) and other retirement plans change, plan documents must be amended to conform to the new laws. Deadlines for making these plan amendments are often contained in the text of the legislation itself. Failure to amend plans to can adversely affect the qualification of the plans, and may also result in penalties and other adverse consequences.

• In the case of the SECURE Act, the statute specifies that most 401(k) plan documents must be amended by no later than the last day of the first plan year beginning on or after January 1, 2022.
• The CARES Act provides that most 401(k) plans must be amended by no later than the end of the first plan year beginning on or after January 1, 2022.

Notwithstanding these statutory deadlines, the U.S. Department of Treasury/IRS has broad authority to provide for later amendment deadlines, and the statutory cutoff dates have been extended in the past for various pieces of major pension legislation.

New, Extended SECURE and CARES Act Plan Amendment Deadlines. For most 401(k) plans, Notice 2022-33 extends the general deadline to adopt applicable plan amendments for both the SECURE and CARES Acts until December 31, 2025 (see “Observation,” section below).

However, there are exceptions:

• Notice 2022-33 does not extend the deadline for adopting retroactive amendments adopting the CARES Act’s optional coronavirus-related distributions and extended loan provisions (which have already expired), the deadline remaining as the last day of the first plan year beginning in 2022. (See our article: Congress Passes CARES Act In Response to COVID-19 Crisis, Contains 401(k) Ease-of-Access and Other Provisions

• Later deadlines apply for governmental plans, but not for collectively bargained plans.

The extended deadline applies to plan provisions reflecting the waiver of required minimum distributions for 2020 under the CARES Act. See our articles:

• Congress Passes CARES Act In Response to COVID-19 Crisis, Contains 401(k) Ease-of-Access and Other Provisions
• 401(k) Plans: They’re Back! Required Minimum Distributions Resume for 2021

OBSERVATION: Because the original, statutory amendment deadlines were based on plan years, whereas the extended deadline in Notice 2022-33 is a specified date, non-calendar year plans should take special care to ensure that the extended deadline is not inadvertently overlooked.

(For more information about non-calendar year 401(k) plans, see our reference article Special Considerations for Non-Calendar Year 401(k) Plans.)

DISCLAIMER: This article is intended only as a brief overview of the new IRS Notice with respect to the deadline extension for 401(k) plan amendments to comply with the SECURE and CARES Acts. It is not intended to address the details of 401(k) plan qualification, plan amendments generally, other legal requirements for plans, or similar topics. As always, please consult your own ERISA attorney or advisor for individualized advice concerning your own 401(k) plan.