The deadline to amend your retirement plans for the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and the Coronavirus Aid, Relief, and Economic Act (CARES Act) is the last day of the first plan year beginning on or after January 1, 2022 (December 31, 2022 for calendar year plans). Highlighted below are a few key changes that may need to be included in your amendment:
- Required minimum distribution (RMD) rules: The required beginning date for RMDs increased from age 70.5 to 72. Additionally, the SECURE Act requires that most beneficiaries will need to be paid out within 10 years after the participant’s death, with exceptions for certain eligible designated beneficiaries.
- Long-term part-time employee eligibility requirements: Under this provision, part-time employees must be offered the opportunity to make deferrals to your 401(k) plan if they work at least 500 hours for 3 consecutive years. Hours must be tracked for plan years beginning after December 31, 2020.
- Optional changes:
- Increase the automatic enrollment safe harbor elective deferral limit cap from 10% to 15%.
- Offer in-service distributions for qualified birth or adoption distributions.
- Suspension of RMDs: The CARES Act suspended required minimum distributions for 2020. This may require an amendment depending upon how it was implemented for your plan and how your plan document is worded.
- Participant loan limits and extension of loan payment terms: For plans that increased their maximum participant loan limits for loans granted from March 27, 2020 to September 22, 2020 and/or plans that allowed deferment of loan payments for a period of up to one year, a plan amendment may be needed.
- Coronavirus related distributions (CRD): If you chose to allow “qualified individuals” to take a CRD for up to $100,000 between January 1 and December 31, 2020, an amendment is required.
Consult with your ERISA attorney or your Blue Ridge ESOP Associates plan administrator to determine if your plan has already been amended or if you will require additional amendments prior to the end of the year.