IRS Broadens 3-Year Extension on CARES, Disaster Tax Relief Acts

Plan sponsors must retroactively amend “the custodial document or plan document to reflect changes made by the legislation,” Berger explained. “For example, a plan that offered COVID-19 withdrawals (CRDs) in 2020 must revise the plan document to reflect this additional distribution option (even though it was effective only in 2020).”

Groom Law Group notes in another alert that “while perhaps unexpected, these additional extensions allow the adoption of SECURE Act, … CARES Act, and 2020 Relief Act changes with a single amendment.”

As a result, “most plans will not be required to adopt IRS required changes this year. But of course, plan sponsors who want to amend their plans now to reflect the CARES Act and 2020 Relief Act provisions, while still somewhat fresh in their mind, can proceed with little concern,” Groom writes.

Plan amendment deadlines, as explained by Eversheds, are amended as follows:

• Qualified retirement plans that are not governmental plans, 403(b) plans not maintained by public schools and IRAs have until Dec. 31, 2025.
• Governmental qualified retirement plans and public school 403(b) plans have until 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.
• Governmental 457(b) plans. The later of 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 if applicable, the first day of the first plan year beginning more than 180 days after the date the IRS notifies the plan that it was administered inconsistently with the requirements of Code section 457(b).

As the IRS explains, a coronavirus-related distribution is any distribution from an eligible retirement plan made on or after Jan. 1, 2020, and before Dec. 31, 2020, to a qualified individual.

Before this extension, the deadline for amendments to qualified retirement plans (other than governmental plans) and IRAs was the end of the first plan year beginning on or after Jan. 1, 2022 (Dec. 31, 2022 for calendar year plans).

The IRS previously released guidance in Notice 2022-33 which provided an extension for other amendments such as those related to changes under the Secure Act for required minimum distributions.