Executive Benefits

Retirement Plan Amendment & Deadlines

Retirement Plan Amendment & Deadlines

Author Executive Benefits Team
Date December 13, 2022
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While the deadlines for implementing select retirement plan amendments have changed, plan sponsors should still consider adopting these amendments as soon as possible as a best practice in plan administration.

Smith & Downey, PA, a respected law firm that concentrates on employee benefits, executive compensation, and human resources law, provides the following key insights regarding deadline changes related to the SECURE Act and CARES Act. We appreciate the opportunity to share these insights with our readers.

From Smith & Downey PA, Retirement Plan Amendment & Deadlines

As we previously have advised, the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act require plan amendments to reflect several changes. Many plan sponsors have already operationally implemented these changes but still need to adopt amendments to their retirement plans. The original deadline was the end of 2022 for most plans (and 2024 for governmental plans).

The IRS recently issued guidance announcing an extension for plan sponsors to adopt amendments under the SECURE Act and CARES Act until December 31, 2025. This extension applies to all qualified retirement plans, 403(b) plans, and governmental 457(b) plans. However, it does not extend the amendment deadline for tax-exempt Section 457(b) plans.

In general, a tax-exempt entity sponsor of a Section 457(b) plan may need to amend the plan to comply with changes required by the SECURE Act. These changes may include increasing the age at which required minimum distributions must begin from age 70 ½ to age 72 and ensuring that any post-death distributions are completed no later than ten years after the participant’s death.

However, the terms of the plan may not be implicated by these changes if, for example, a participant cannot defer distributions to age 72 in any event and/or death benefits are paid in a lump sum shortly after the death of the participant. It may also be the case that your plan incorporates the required minimum distribution rules by reference (as many, but not all, Smith & Downey plan documents do), so no updates would be needed to the plan, but likely will be needed in the plan’s administrative forms.

Key Takeaway Regarding Retirement Plan Amendments

Of course, regardless of the deadline, we recommend that all plan sponsors take steps to adopt these required (and certain optional) plan amendments as soon as possible. This is simply a best practice to ensure your plan document is mirroring plan operations, thereby reducing the risk of operational errors, IRS or DOL audit, violation of fiduciary duties, among other similar issues. In addition, plan sponsors should ensure all participant communications are updated and accurately reflect plan operations and administration.

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This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through Lion Street Advisors, LLC (LSA) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI and LSF/LSA are non-affiliated entities and separate entities from OneDigital.

Unless otherwise noted, VAI/VSI, LSF/LSA are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

Lion Street Advisors // Lion Street Financial

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