As we enter the summer months, retirement plan sponsors should start looking to the end of the 2022 calendar year to ensure they are prepared to adopt all necessary plan amendments ahead of the deadlines. To cut through some of the confusion of COVID-related legislation passed over the past few years, we have compiled a list of three primary amendment opportunities employers should add to their to-do list.

The SECURE Act

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act1 into law, making significant changes to most retirement plans, including 401(k)s.

Retirement plan documents must be formally amended no later than December 31, 2022.

Key amendments include:

Additionally, if an employer adopted any of the SECURE Act’s optional amendments, they should be sure to have those reflected in formal amendments, executed not later than December 31, 2022.

The CARES Act

After the COVID-19 pandemic was declared a public health emergency, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act)3 into law on March 27, 2020. Under the CARES Act, retirement plan sponsors could adopt temporary and optional plan amendments, providing relief to employees and their families.

Some key optional provisions include:

Like the SECURE Act, if an employer adopted any of the CARES Act’s optional amendments, they should be sure to have those reflected in formal amendments, executed not later than December 31, 2022.

Cycle 3 Restatement for Pre-Approved Plans

The Internal Revenue Service (IRS) requires that all pre-approved retirement plans be amended and restated every six years, giving plan sponsors the opportunity to align their plans with current law and business practices.

For retirement plan sponsors with pre-approved 401(k), profit sharing, or money purchase plans, the Cycle 3 restatement window4 opened on August 1, 2020 and closes on July 31, 2022.

Failing to restate a plan within the Cycle 3 window can lead to IRS penalties, and in some cases, disqualification of a retirement plan.

When restating a plan, employers should be sure to review their 401(k) plan document and adoption agreement, confirming that each complies with the intended plan design along with applicable legislative and regulatory requirements. Additionally, employers will want to align their plan documents with their summary plan description (SPD) and any other employee communications, such as an employee handbook.

This content was originally published here.

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