Blue Ridge ESOP Associates Industry News

IRS Extends Deadline for most SECURE/CARES Act Amendments

Posted by Blue Ridge ESOP Associates

Oct 28, 2022 1:29:58 PM

(Section415)*IRS_DOLPrior to recent IRS announcements, Plan Sponsors were facing the task of amending their ESOP and 401(k) documents before the end of the 2022 plan year for certain mandatory changes and/or optional changes enacted as part of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) and the Coronavirus Aid Relief and Economic Security Act of 2020 (CARES) – together the “Acts”. IRS Notices 2022-33 and 2022-45 announced an extension to amend until December 31, 2025.

The main issues relating to retirement plans like ESOPs and 401(k) in the SECURE Act relates to the required minimum distribution (RMD) rules. The CARES Act provided for the suspension of RMDs in 2020, coronavirus related distributions, increased limits on participant loans and suspension of loan repayments. The availability of the distribution and loan related provisions in CARES were optional and not required to be offered to participants. While the deadline to amend Plan documents has been extended it is still required to operate your Plan(s) in compliance with the Acts.

Some clients were using the need to amend for the Acts as an opportunity to restate their documents to a pre-approved document offered by Blue Ridge and then amend that document for SECURE and CARES when the amendments became available. While the urgency to restate with the intention to amend for SECURE and CARES Acts by the original 2022 deadline is no longer present, we will be reaching out to those clients that expressed interest in restating to our pre-approved volume submitter document with additional information.

On October 21, 2022, the IRS announced cost of living adjustments affecting qualified retirement plans for 2023.  Every limit increased from 2022 to 2023.

Selected Limits

2023

2022

401(k) Elective Deferrals 

$22,500

$20,500

401(k) Catch Up Deferrals  

$7,500

$6,500

 

Annual Defined Contribution Limit (section 415)*  

$66,000

$61,000

 

Annual Compensation Limit **   

$330,000

$305,000

Highly Compensated Employees

(look-back year calculation)**

$150,000

$135,000

 

Key Employee – Officer Threshold* 

$215,000

$200,000

Social Security Wage Base 

$160,200

$147,000

 

ESOP Threshold Balance for lengthening the 5-year installment period

$1,330,000

$1,230,000

 

Amount for lengthening the 5-yearESOP installment period  

$265,000

$245,000

 

  *Effective for limitation years ending in calendar year

**Effective for plan years beginning in the calendar year

 

Topics: ESOP & 401(k) Plans, Plan Document, CARES Act