The SECURE Act, which was enacted in 2019, made several changes impacting required minimum distributions that impacts virtually all retirement plans. The most commonly known change was the change in the required beginning date from 70 ½ to age 72. It also changed the distribution on death rules eliminating the option to pay over the beneficiary’s lifetime, except where the beneficiary is an eligible designated beneficiary. To learn more about these rules, check out our prior posts here and here.
The original deadline to adopt SECURE Act amendments for all non-governmental plans was the last day of the plan year beginning on or after January 1, 2022 (i.e., December 31, 2022 for calendar year plans). In Notice 2022-33, the IRS extended the SECURE Act amendment deadline for qualified plans, 403(b) plans and governmental 457(b) plans. Qualified plans, including 401(k) plans, now have until December 31, 2025 to adopt SECURE Act amendments. Governmental 457(b) plans have until 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.
What is missing from the list of plans granted an extension are 457(b) plans maintained by tax-exempt employers. Initially, most of the retirement plan industry thought this was likely an oversight on the part of the IRS. However, the IRS has since issued two other semi-related pieces of guidance in which it could have fixed this issue if it was unintentional and it has not done so. While the IRS sometimes issues deadline extensions very close to the deadline, we are getting late into the year for plan sponsors to hope that such extension will be granted. Therefore, if you haven’t yet amended your 457(b) plan for the SECURE Act, you should reach out to your document provider now to ensure it gets done by year end.
If you have questions on the changes to the RMD rules or need assistance amending your plan, please contact any Graydon employee benefits attorney.
