As the second half of 2022 begins, there are some deadlines relevant to retirement plans that now come into sharper focus. Some are becoming immediate; with others, there still is a bit of time to prepare.
July 31, 2022
Pre-Approved Plans (Cycle 3 Restatement). All plans using IRS pre-approved plan documents must update their plan documents every six years with a plan restatement to reflect legislative and regulatory changes that have been made since the last restatement. The current restatement cycle is Cycle 3 for defined contribution plans. These restatements do not apply to individually designed plans that are not maintained using IRS pre-approved plan documents.
The window for these restatements began on Aug. 1, 2020, and closes July 31, 2022; the July 31, 2022 deadline is mandatory. There is a different deadline for defined benefit plans and 403(b) plans.
Such a restatement already should have been shared with the point of contact for the plan, reminds the law firm Michael Best in a recent client alert. They add that plan sponsors should be ready to conduct an internal review of the restatement and/or review it with the legal department or service providers before adoption to ensure that the restatement:
- accurately reflects the current, and intended, plan design; and
- aligns with employee communications, such as the summary plan description (SPD).
Form 5500. For DB plans, DC plans and 403(b) annuity arrangements with calendar year plan years, the Form 5500 filing deadline for the 2021 plan year is not far off. In most years that would mean July 31—but not in 2022.
The form must be filed by the end of the seventh month after the end of a plan year. Since most plans set their plan years to the calendar year, most plans have to file by July 31. However, in 2022, July 31 is a Sunday; when that date falls on a weekend, the form is due on the next business day. In 2022, that is Monday, Aug. 1.
Dec. 31, 2022
It’s further out, but New Year’s Eve is just six months away. By then, there are things that must be done under the SECURE Act and the CARES Act.
SECURE Act. Under this measure, by Dec. 31, 2022, the plan documents of DC plans must be formally amended to reflect changes that had to be made in 2020, and amendments must have been executed by then. These changes include:
- For participants born after June 30, 1949, plans must adopt an amendment increasing the required beginning date for required minimum distributions (RMDs) from April 1 following the calendar year in which a participant attains age 70½ to April 1 following the calendar year in which a participant reaches age 72.
- Plans must adopt an amendment changing the distribution timing rules for benefits paid when a participant dies. For participants who die on or after Jan. 1, 2020, distributions must be completed within 10 years after the participant’s death, unless the participant’s beneficiary is his or her spouse or another eligible designated beneficiary.
CARES Act. This law included provisions making optional temporary changes that plan sponsors could make to their plans. Such changes implemented must be adopted by a formal amendment by Dec. 31, 2022.
Key optional changes that can be made to DC plans under the CARES Act, reminds Michael Best, include:
- Waiving RMDs that would have been due in 2020.
- Allowing qualified individuals to take coronavirus-related distributions of up to $100,000 in 2020, with the 10% early withdrawal tax penalty and 20% mandatory federal income tax withholding that would have applied to such a distribution waived.
- Increasing the limit on participant loans granted to qualified individuals between March 27, 2020 and Sept. 22, 2020 to the lesser of $100,000 or 100% of the participant’s vested balance.
- Extending the repayment deadline for any loan repayments due between March 27, 2020 and Dec. 31, 2020.
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I believe there's a misstatement in that last quote - it should refer to governmental and union plans, not defined benefit. All sources I'm finding state the same 2022 deadline for DB plans as for DC.
Much as I'd love for that to be right... I'm pretty sure we're still on the hook for this year.