The IRS on Sept. 26 in Notice 2022-45 announced that it is extending the deadline for amending eligible retirement plans in relation to coronavirus-related distributions and the use of retirement funds for disaster-related assistance.
More specifically, the notice addresses deadlines in relation to Section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and Section 302 of Title III of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), which was enacted in Division EE of the Consolidated Appropriations Act, 2021.
Among other things, Section 2202 of the CARES Act and Section 302 of the Relief Act provide special tax treatment with respect to a coronavirus-related distribution or a qualified disaster distribution, respectively.
Under the notice, the extended amendment deadline applicable to (1) a qualified retirement plan or Section 403(b) plan that is not a governmental plan or (2) an IRA is Dec. 31, 2025.
The IRS explains that later deadlines apply with respect to governmental retirement plans, including governmental plans under Internal Revenue Code (IRC) Section 457(b).
With respect to an amendment made to reflect provisions of Section 2202 of the CARES Act, relief from the anti-cutback requirements of IRC Section 411(d)(6) or Section 204(g) of ERISA is also extended to the applicable extended plan amendment deadline.
Background
As enacted, Section 2202(c) of the CARES Act provided that an eligible retirement plan will not be treated as failing to operate in accordance with its terms merely because the plan implements the provisions of Section 2202 if the plan is amended within the period that begins on the date that Section 2202 takes effect, and ends on or before the earlier of:
(1) the date the amendment is adopted, or
(2) the last day of the first plan year beginning on or after Jan. 1, 2022 (or Jan. 1, 2024, in the case of a governmental plan under IRC Section 414(d), or a later date prescribed by the Treasury Secretary.
Similarly, under Section 302(d) of the Relief Act, an eligible retirement plan will not be treated as failing to operate in accordance with its terms because the plan implements the provisions of Section 302 if the plan is amended within a prescribed period and the amendment applies retroactively to the beginning of it.
What the Notice Does
In detail, Notice 2022-45 does the following:
Qualified Plans
In general, for a qualified plan that is not a governmental plan under IRC Section 414(d), the deadline to amend a plan is Dec. 31, 2025. The plan amendment deadline for a qualified governmental plan under Section 414(d) is 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 Dec. 31, 2023.
403(b) Plans
In general, for a 403(b) plan that is not maintained by a public school, the deadline to amend a plan is Dec. 31, 2025. The plan amendment deadline for a 403(b) plan that is maintained by a public school is 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 Dec. 31, 2023.
457(b) Plans
The deadline to amend a governmental 457(b) plan is 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 Dec. 31, 2023, or (2) if applicable, the first day of the first plan year beginning more than 180 days after the date of notification by the Treasury Secretary that the plan was administered in a manner that is inconsistent with the requirements of Section 457(b).
IRAs
The deadline to amend the trust governing an IRA that is an individual retirement account or the contract issued by an insurance company with respect to an IRA that is an individual retirement annuity is Dec. 31, 2025.
Anti-cutback Relief
Meanwhile, as noted earlier, amendments to an eligible retirement plan (including an annuity contract) to reflect a provision of Section 2202 that are made on or before the dates as extended under Notice 2022-45 will not cause the plan to fail to satisfy the anti-cutback requirements of IRC Section 411(d)(6) or Section 204(g) of ERISA by reason of the amendments.
Notice 2022-45 will be in published in Internal Revenue Bulletin 2022-42 on Oct. 17, 2022.
