One-size-does not fit all when amending a 457(b) plan of a governmental employer to comply with the Setting Every Community Up for Retirement Enhancement Act (SECURE) of 2019 and Coronavirus Aid, Relief, and Economic Security Act (CARES). 
A 457(b) plan document must satisfy the written plan requirement of the IRS regulations. Amending the 457(b) plan document for federal legislation helps keep that 457(b) plan compliant with IRS rules.
What items are in scope when amending a governmental 457(b) plan for SECURE and for CARES?
SECURE
- modified the minimum distribution requirements for both participants and beneficiaries under a governmental 457(b) plan; and
- offered the following optional features under a governmental 457(b) plan:
- qualified birth and adoption withdrawals of up to $5,000 per birth or adoption of a participant’s child within one year; and/or
- in-service withdrawals at age 59½.
CARES
- waived the 2020 minimum distribution requirement for both participants and beneficiaries under a governmental 457(b) plan; and
- offered the following optional features under a governmental 457(b) plan:
- coronavirus-related distributions of up to an aggregate $100,000 limit to a qualified individual during the period from Jan. 1, 2020, to Dec. 30, 2020;
- coronavirus-related increase in the loan maximum of the lesser of $100,000 or 100% of the vested account to a qualified individual during the period from March 27, 2020, to Sept.22, 2020; and/or
- coronavirus-related delay in loan repayment to a qualified individual for loan repayments due from March 27, 2020, to Dec. 31, 2020.
What is the deadline for amending a governmental 457(b) plan for SECURE?
As extended by IRS Notice 2022-33, a 457(b) plan sponsored by a governmental employer must be amended for SECURE by the later of:
- 90 days after the close of the third regular legislative session for the plan year that begins after Dec. 31, 2023 where that legislative body has the authority to amend that 457(b) plan; or
- the first day of the first plan year beginning no more than 180 days after the date that the IRS notifies the governmental employer that the 457(b) plan was administered in a manner that is inconsistent with the 457 regulatory requirements.
Generally, the plan amendment deadline for SECURE will depend on when the third regularly scheduled legislative session of that governmental employer sponsoring the 457(b) plan ends. For many governmental employers whose legislatures meet annually, the 457(b) plan amendment deadline for SECURE would be sometime in 2026 — but the due date for adopting the amendment will depend on whether that legislature’s third session ends prior to calendar year end.
Is the CARES plan amendment deadline the same deadline as amending the plan for SECURE?
Yes, recent IRS guidance provides that the required minimum distributions waiver for 2020, and the permissive features under CARES (coronavirus-related distributions, coronavirus-related increase in the loan maximum, and/or a coronavirus-related delay in loan repayments) all operate under the same plan amendment deadline.
What is the deadline for amending a governmental 457(b) plan for other CARES features?
Unless the IRS subsequently provides for an extension to the plan amendment deadline, a governmental 457(b) plan offering other CARES features –coronavirus-related distributions and/or the coronavirus-related loan relief — must be amended by the end of the 2024 plan year.
Best practices
- Assess state/local law to conform to SECURE and CARES provisions.
- Coordinate with your plan document provider on required and optional plan design features.
- Authorize an individual to be responsible for timely adopting plan amendments to the 457(b) plan and ensure that the plan amendment is timely signed.
- Maintain the plan document, including amendments, in a secure location.
IRS Resources
- IRS Notice 2022-33 https://www.irs.gov/pub/irs-drop/n-22-33.pdf
- IRS Notice 2022-45 https://www.irs.gov/pub/irs-drop/n-22-45.pdf
Linda Segal Blinn is Vice President of Voya’s Technical Services for the Tax Exempt Markets. She is a member of the 403(b) Retirement Plan council of the Association of School Business Officials International, and the National Tax-deferred Savings Association (NTSA)’s Professional Education Committee and is a contributing author of the 403(b) Answer Book.
Linda is not a practicing attorney for Voya Financial.
Opinions expressed are those of the author, and do not necessarily reflect the views of the NTSA or its members.
Used by permission. The original appears here.
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