Countdown to SECURE, CARES and SECURE 2.0 plan amendment deadline for employers

Written by Kim Solecki

A key component of plan administration is ensuring that the plan is operated in accordance with the terms of the written plan document. As issues arise, the common response is that “You need to check the plan document.”  

SECURE 2.0 established a delayed amendment deadline for legislative and regulatory changes, which presents a challenge in ensuring that the plan is operating, and during the extended amendment period has been operating, in compliance with the plan document that is ultimately amended. 

A recommended best practice is for employers to document operational procedures that have been implemented prior to amending the plan document. This documentation should also identify each provision that is adopted and the effective date(s) of the adoption. This documentation should occur prior to changes being implemented so there is a clear record if there are any changes in personnel.

Case in point: the deadlines for plan amendments for Setting Every Community Up for Retirement Enhancement (SECURE) Act, the Coronavirus Aid, Relief and Economic Security (CARES) Act and SECURE 2.0 Act (SECURE 2.0). While these Acts all provided for a deadline for amending a plan document, they also permitted the Secretary of the Treasury to provide for a later plan amendment date. Internal Revenue Service (IRS) Notice 2024-2 — the most recent IRS guidance — provides that required and discretionary amendments must be amended according to the following:

• Non-governmental 457(b) plans – no later than the last day of the 2025 plan year
• Non-governmental 401(a), 401(k) and 403(b) plans – no later than December 31, 2026
• Collectively Bargained 401(a), 401(k) and 403(b) plans – no later than December 31, 2028
• Governmental 401(a),403(b) and 457(b) plans – no later than December 31, 2029

Should employers amend their plans prior to the applicable plan amendment deadline?

There are still pending clarifications and other factors that plan sponsors should consider with respect to this approach:

• Technical corrections to SECURE 2.0 – In December 2023, the House and Senate released a discussion draft containing technical corrections and other clarifications with respect to the SECURE 2.0. To date, the discussion draft has not been introduced as a bill, been passed by Congress, or signed into law.
• Status of IRS guidance – While the IRS has completed its guidance on CARES, the same cannot be said of either SECURE or SECURE 2.0.  The Treasury Department’s priority guidance plan notes that guidance implementing changes made by SECURE and SECURE 2.0 are still pending.
• Plan document provider delivery system – Since IRS guidance addressing SECURE and SECURE 2.0 has not been finalized, the plan document provider may be waiting for that guidance and/or sample IRS model plan amendments in order to develop plan provisions for their plan sponsors.
  • Keep in mind that if a plan document provider has drafted amendments for SECURE and SECURE 2.0 provisions, a follow-up amendment may need to be adopted to reflect subsequent IRS guidance.
• Separate amendments – While SECURE, CARES and SECURE 2.0 share a common plan amendment deadline based on the IRC section of the plan and the type of employer (nongovernmental or governmental) there is no requirement that a plan be amended for all three Acts at the same time. Since CARES was effective for a distinct and limited time period, and there is no expectation of future clarifying IRS guidance, an employer may consider adopting a plan amendment to reflect the CARES provisions under which the plan operated sooner than the applicable deadline.
• Governmental plans and state/local law – Some states and localities have laws that authorize the plan design features that can be offered in a governmental plan. If so, state and/or local law may need to be amended to conform with the federal SECURE, CARES and SECURE 2.0 mandatory and optional provisions.

Regardless of the approach an employer chooses with respect to plan amendment timing, because of the lengthy time period between the effective dates and adoption dates of those provisions and the applicable plan amendment deadline, it is a best practice to capture and memorialize an employer’s operational choices (as well as required provisions, such as the increase in the minimum distribution age from 70½ to 72 under SECURE, and subsequently to 73 under SECURE 2.0), perhaps by maintaining a checklist that is kept securely with plan records. Accurate records will help facilitate both plan compliance and the eventual plan amendment process.

Expand Your Knowledge: Visit the SECURE 2.0 Employer Resource Center

Kim Solecki is a member of the Technical Services Team for the Tax Exempt Markets, with significant experience in the defined contribution retirement plan industry, including 403(b), 401(k) and 457(b) plans. Kim has a Master of Science in Human Resources Management and holds a Certified Employee Benefits Specialist (“CEBS”) designation through the IFEBP (International Foundation of Employee Benefit Plans), in partnership with the Wharton School of the University of Pennsylvania.