Latest News, Local News, International News, US Politics, Economy

SECURE Act Amendments And CARES Act RMD Waivers Have Been Deferred Until 2025

The Internal Revenue Service (IRS) issued Notice 2022-33 on August 3, 2022. This notice extends the deadline for plans to adopt all SECURE Act [1] amendments, whether they are required or optional (a summary of the changes made by the SECURE Act can be found here), CARES Act [2] amendments relating to relief from required minimum distributions in 2020, and Miners Act [3] amendments lowering the permitted age for in-service distributions to 5912 for defined.

For qualified non-governmental retirement plans such as 401(k) plans, money purchase pension plans, and defined benefit plans, as well as 403, (b) plans that are not maintained by public schools, the new deadline for adopting these amendments is the 31st of December, 2025.

This deadline extension was granted because the original deadline was set for December 31, 2018.

[4] Notably, in contrast to the deadline that was specified in earlier IRS guidance as “the last day of the first plan year commencing on or after January 1, 2022,” the deadline that has been set for December 31, 2025, is a hard date that does not depend on when the plan year ends.

To take advantage of the extended deadline, the plan needs to be operated in a manner that is consistent with the terms of the amendments, as if the changes were in force during the entirety of the time commencing with the effective dates of the amendments.

That is to say, the changes may take effect retroactively to the plan’s effective date, but the plan’s activities must be consistent with the amendments beginning on that day.

Plan sponsors may benefit from the extension of the deadline for adopting amendments that were provided by Notice 2022-33, as well as from the possibility that the IRS will provide additional guidance on the provisions of the SECURE Act (in particular the provisions affecting the RMD rules and the provisions relating to 401(k) plan eligibility for certain long-term, part-time employees).

It is important to note that Notice 2022-33 does not extend the previously established plan amendment deadline for optional CARES Act changes. Some examples of these changes include increased loan limits for participants affected by coronavirus and withdrawals related to the coronavirus.

A calendar year plan that, while it was active, increased loan limits, suspended certain loan payments that were otherwise due in 2020, and/or permitted coronavirus-related withdrawals needs to be amended to reflect these provisions no later than December 31, 2022, unless the IRS grants a similar deadline extension for the optional provisions of the CARES Act. If the IRS does not grant such an extension, the deadline will remain unchanged.


Why do we have to push the deadline back to 2025?

There are a few possible explanations for the pushed-back deadline, including the following:

The extension provides additional time for the Internal Revenue Service (IRS) to issue further guidance on the changes to the RMD rules that were made by the SECURE Act, after taking into consideration the comments that were received on the proposed RMD regulations that it issued on February 24, 2022.

Notice 2022-33 states that the Internal Revenue Service (IRS) anticipates that certain guidance issued under the SECURE Act will appear on its 2023 Required Amendments List (“RAL”).

If this were to occur, the extended deadline would “synch up” the deadline for all SECURE Act, Miners Act, and CARES Act amendments described in Notice 2022-33 to a single date: December 31, 2025, for individually designed nongovernmental qualified retirement plans.

[5] This year, there is a significant probability that federal legislation that would contain more changes to the RMD standards will be adopted and put into effect.

Plan sponsors do not have to wait until 2025 to approve required adjustments; the latest deadline extension is generous, but plan sponsors should consider the extended deadline a chance to:

revisit the plan’s recordkeeping practises and administration, including consistent documentation of processes relating to these amendments; determine the initial dates when changes allowed by the SECURE Act, the CARES Act, and the Miners Act were impracticable; and solidify internal operations, procedures and manuals concerning plan provisions affected by the SECURE Act, the CARES Act, and the Miners Act (which may be more difficult to accomplish in the absence of formal plan amendments).

[1] The Community Reinvestment and Opportunity to Achieve Retirement Enhancement Act of 2019 (SECURE Act).

[2] Act for the Aid, Relief, and Economic Security in the Event of Coronavirus (CARES Act).

[3] The American Miners Fairness and Safety Act of 2019 (Miners Act).

[4] The new extended deadline for government plans and the 403(b) plans offered by public schools are not the same.

The previous deadline for plans that were not applicable to collectively bargained or governmental plans was the last day of the first plan year beginning on or after January 1, 2022. The previous deadline for plans that were applicable collectively bargained or governmental plans was the last day of the first plan year beginning on or after January 1, 2024.

Read more:-

[5] If the general plan amendment timing principles in IRS Revenue Procedure 2016-37 were applied to that SECURE Act guidance, the plan amendment deadline for such plans would be December 31, 2025.

This is the last day of the second calendar year that begins after the issuance of the RAL in which the change in qualification requirements appears, so it is the last day of the second year after the RAL.

Leave A Reply

Your email address will not be published.