September 2022 Compliance Article

Amendment Deadlines Extended

The Internal Revenue Service (IRS) has extended the deadline to amend an eligible retirement plan, including an individual retirement arrangement or annuity contract (IRA), to adopt provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act).

Background

Under the CARES and Relief Acts, among other provisions, individuals could receive favorable tax treatment for distributions under certain circumstances. For the CARES Act, qualified individuals could receive coronavirus-related distributions made from a qualified retirement plan between January 1, 2020, and December 31, 2020. Under the Relief Act, individuals could receive disaster distributions made on or after the date of the disaster, but no earlier than December 28, 2019, and before June 25, 2021. Eligible retirement plans would not be treated as failing to operate under the terms of the plan if the plan is amended within the prescribed time frame and the amendment applies retroactively to the beginning of the time period.

New Amendment Deadlines

The extended deadlines below also apply to the relief from the anti-cutback requirements of the Internal Revenue Code and ERISA that was part of the CARES Act.

Qualified plans

The deadline for qualified non-governmental plans is generally December 31, 2025. For qualified governmental plans, the deadline 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 December 31, 2023.

403(b) plans

The deadline for 403(b) plans that are not maintained by a public school is generally December 31, 2025. The plan amendment deadline for a section 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 December 31, 2023.

457(b) plans

The deadline to amend a 457(b) governmental 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 December 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 Secretary that the plan was administered in a manner that is inconsistent with the requirements of section 457(b) of the Code.

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 December 31, 2025.

The subject matter in this communication is educational only and provided with the understanding that Principal^® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

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