As described in our prior blog post, the US Internal Revenue Service (IRS) recently extended many impending amendment deadlines for legislative changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Bipartisan American Miners Act of 2019 (MINERS Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). However, for reasons that were not entirely clear, the IRS did not extend the amendment deadline for certain CARES Act changes at the time. Now, in Notice 2022-45, the IRS is extending the amendment deadline for the remaining CARES Act changes.
Following this extension, it will be possible for plan sponsors and individual retirement arrangement (IRA) providers to adopt applicable amendments to address CARES Act, SECURE Act, and MINERS Act provisions in a single amendment and by the same extended amendment deadline.
As with the initial extension of the amendment deadline described in Notice 2022-33, the IRS extended anti-cutback relief for an amendment to reflect the CARES Act changes described below, provided that the plan was operated consistent with the amendment on and after the effective date of the amendment. Before Notice 2022-45, the remedial amendment deadline for calendar year, non-governmental retirement plans, IRAs and 403(b) plans to adopt the CARES Act changes below was December 31, 2022. Under Notice 2022-45, the remedial amendment deadline has now been extended to the same date(s) as for SECURE Act and MINERS Act provisions, as follows:
- CARES Act provisions regarding coronavirus-related in-service distributions, increased loan limits, temporary suspension of loan repayments, and qualified disaster distributions:
- Qualified, non-governmental retirement plans and non-governmental 403(b) plans, including collectively bargained plans, and IRAs now must be amended by December 31, 2025.
- Qualified governmental retirement plans and 403(b) plans must be amended by 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 December 31, 2023.
- Governmental 457(b) plans must be amended by the later of (1) 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 December 31, 2023, or (2) the first day of the first plan year beginning more than 180 days after the plan receives notice by the secretary of labor that the plan was administered in a manner inconsistent with the requirements of 457(b).
Plan Sponsor Action Items
Unlike the SECURE Act changes for which the deadline was extended under Notice 2022-33, the operational impact of the CARES Act loan repayment changes and coronavirus-related distributions will have occurred long before the extended amendment deadline. Participants were only permitted to take coronavirus-related distributions between March 27, 2020, and December 30, 2020. The latest possible date to repay a coronavirus-related distribution to a plan would be December 31, 2023.
Further, participants were only permitted to take increased loans between March 27, 2020, and September 22, 2020, and loan repayments were only suspended between March 27, 2020, and December 31, 2020, and delayed for one year. For that reason, some plan sponsors may have already adopted these CARES Act changes in order to capture the plan's administration during the time they were in effect. Other plan sponsors may wish to do so now while the changes and the plan's administration is fresh and top of mind. However, based on the recent extension, plan sponsors now have the flexibility to delay the adoption of an amendment to reflect CARES Act changes until a later date. Plan sponsors who choose to delay amending their plans to reflect CARES Act changes may wish to consider documenting how the plan was administered to ensure that the eventual amendment will accurately reflect the plan’s administration.
IRA Provider Action Items
IRA owners were only permitted to take coronavirus-related distributions between March 27, 2020, and December 30, 2020. The latest possible date to repay a coronavirus-related distribution to a plan would be December 31, 2023. For that reason, some IRA providers may have already adopted changes to reflect coronavirus-related distributions in order to capture the administration and operation of the IRA during the time these provisions were in effect, and others may wish to do so now while the changes and the administration is fresh and top of mind. (As noted in IRS Announcement 2022-6, adopters of prototype IRAs, SEPs, and SIMPLE IRA plans are allowed to amend their documents to reflect recent legislation without affecting their reliance on a previously received favorable opinion letter, so IRA providers have the option to amend before the 2025 deadline while the IRS opinion letter program is suspended.)
However, based on the recent extension, IRA providers now have the flexibility to delay the adoption of an amendment to reflect CARES Act changes until a later date, but may wish to consider documenting how the IRA was administered to ensure that the eventual amendment will accurately reflect administration.
If you have a question on this topic, please contact any of the authors of this post or your Morgan Lewis contact.