IRS extends retirement amendment deadlines for SECURE, CARES Acts

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The Internal Revenue Service delivered good news this month to retirement plan sponsors scrambling to make year-end amendments required by recent legislation.

IRS Notice 2022-23 extends the deadline for updating qualified retirement plans required by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, and the Bipartisan American Miners Act (BAMA) of 2019 until Dec. 31, 2025.

“Previously, qualified plans were generally required to be amended … by the last day of the first plan year beginning on or after January 1, 2022,” according to The National Law Review. “This meant the deadline for many plans could be as early as December 31, 2022. Because the IRS has yet to issue final guidance with respect to some of these legislative provisions, the notice extends the deadline for plan amendments relating to applicable provisions of the SECURE Act, the BAMA, and Section 2203 of the CARES Act … for non-governmental qualified plans. Governmental plans are granted further delayed deadlines depending on the underlying circumstances of the plan sponsor.”

“This is welcome news for plan sponsors waiting for final IRS rules on various aspects of the SECURE Act, including post-death RMD [required minimum distribution] rules and the inclusion of long-term part-time employees, as well as providers of IRS pre-approved defined contribution plans, as the IRS anticipates these amendments will be required during the fourth remedial amendment cycle window falling between February 1, 2024, and January 31, 2025,” notes Ben Josselsohn, senior counsel at law firm Cohen & Buckmann in New York City.

The SECURE Act altered several retirement account rules, including raising the RMD age from 70 ½ to 72 and making more long-term part-time employees eligible for 401(k) plans. The CARES Act, passed in response to the COVID-19 pandemic, allowed (among other things) individuals to take special disbursements and loans from tax-advantaged retirement funds of up to $100,000 without penalty and suspended the minimal requirement distributions from retirement plans in 2020.

“However, Notice 2022-23 apparently did not extend the deadline to amend plans for changes to loans and in-service withdrawals due to coronavirus (CARES Act),” writes Brenda Berg, a partner in the Denver office of the law firm Holland & Hart. “The Notice only modified a specific section of the CARES Act, which relates to the suspension of minimum required distributions. Assuming this omission was intentional, and the IRS doesn’t issue a revised Notice extending that deadline, plan amendments for all CARES Act provisions other than the suspension still need to be adopted by the previous deadlines.”

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