IRS Issues 2022 Cumulative List of Changes in 403(b) Plan Requirements

The IRS on Jan. 28 issued the 2022 Cumulative List of Changes in Plan Qualification Requirements. Contained in Notice 2022-08, the list sets forth the 2022 Cumulative List of Changes in Section 403(b) Requirements for Section 403(b) Pre-Approved Plans.

The 2022 Cumulative List will assist providers of 403(b) pre-approved plans applying to the IRS for opinion letters for the second remedial amendment cycle (Cycle 2, which began on July 1, 2020) under the 403(b) pre-approved plan program. It identifies changes in the requirements of Section 403(b) that the IRS will take into account concerning a plan document submitted to the IRS for Cycle 2 and that were not taken into account during the first remedial amendment cycle. 

If a plan was not reviewed during Cycle 1, the IRS will review the plan taking into account items on the 2022 Cumulative List, as well as the Section 403(b) requirements that were reviewed during Cycle 1. Those requirements included the final regulations under Section 403(b) and any applicable requirements of the 2012 Cumulative List of Changes in Plan Qualification Requirements set forth in Notice 2012-76, 2012-52 IRB 775.

Changes the 2022 Cumulative List Addresses

The 2022 Cumulative List reflects the following changes.

1. Changes under Code Section 401(m) concerning: 

• safe harbor plans;
• the definition of qualified matching contributions;
• in-plan Roth rollovers;
• hardship distributions;
• lifetime income investment options;
• distribution of individual custodial accounts upon plan termination; and 
• qualified birth or adoption distributions. 

2. Rollovers from a section 403(b) plan to a SIMPLE IRA.

3. Amendments to Code Section 403(b)(9) to clarify that an employee described in Code Section 414(e)(3)(B) may be included in a 403(b) plan.

4. Final regulations under Code Section 401(a)(9) that were published on July 2, 2014 (TD 9673, 79 FR 37633) that provide a limited modification of the required minimum distribution (RMD) rules for 403(b) plans holding qualifying longevity annuity contracts.

5. Changes to Section 401(a)(9) that:

• increase the age by which the required beginning date for RMDs is determined from age 70½ to age 72; and 
• provide new RMD rules for designated beneficiaries.

6. Transition relief from the “once-in always-in” condition for excluding part-time employees under Treas. Reg. §1.403(b)-5(b)(4)(iii)(B), including relief regarding plan language for 403(b) pre-approved plans.

7. Amendments to Section 415(c) to treat difficulty of care payments that are excluded from gross income as compensation for determining retirement contribution limitations.

8. The definition of “spouse.”

9. Special disaster-related rules for use of retirement funds.

10. Amendments to Code Section 414(c) that provide special rules for church plans for purposes of: 

• determining controlled groups;
• automatic enrollment arrangements;
• certain plan transfers and mergers; 
• investments in collective trusts; and 
• IRS guidance implementing them. 

Deadlines 

Section 403(b) plans may be submitted for approval during the Cycle 2 on-cycle submission period, which begins May 2, 2022, and ends May 1, 2023.

The list of changes in Section IV of Notice 2022-08 does not extend the deadline by which a 403(b) pre-approved plan must be amended to comply with any change in the Section 403(b) requirements—which include not only the requirements of Section 403(b), but also those contained in regulations and other guidance published in the Internal Revenue Bulletin. 

The general deadline for timely adoption of an interim or discretionary amendment is provided in section 12 of Revenue Procedure (Rev. Proc.) 2019-39, 2 2019-42 IRB 945, as modified by section 4 of Rev. Proc. 2020-40, 2020-38 IRB 575, and section 22 of Rev. Proc. 2021-37, 2021-38 IRB 385.

Factors Generally Not Considered

Except as provided in section IV of Notice 2022-08, the IRS will not consider any of the following items in its review of any opinion letter application for Cycle 2: 

• Guidance (regulations and other guidance published in the Internal Revenue Bulletin) issued after Nov. 1, 2021. 
• Statutes enacted after Nov. 1, 2021. 
• Statutes, regardless of when they are enacted, that are first effective in 2022 or later for which there is no guidance identified in this notice. 
• Section 403(b) requirements that are first effective in 2023 or later, regardless of when the section 403(b) requirements are enacted or issued.

Notice 2022-08 will be published in Internal Revenue Bulletin (IRB) 2022-7 on Feb. 14, 2022.