The IRS announced in Notice 2024-2 that the amendment deadline most qualified retirement plans, including 401(k) plans, for several recent pieces of federal legislation generally has been extended by up to one year. This comes on the heels of its November 8, 2023 announcement that the 2023 required amendments list would necessitate no year-end amendments for 401(k) plans.
The Notice, released on December 20, 2023, generally applies to plan amendments (either mandatory or discretionary) that are required to be made in response to applicable provisions contained in the following new laws:
- Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”);
- Coronavirus Aid, Relief and Economic Security Act (“CARES”);
- Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act); and
- SECURE 2.0 Act (“SECURE 2.0”).
Notably, SECURE 2.0 had previously coordinated the amendment deadline for these laws, setting such deadline as the last day of the plan year beginning on and after January 1, 2025, which would have been December 31, 2025, for calendar year plans.
But under the Notice, for most 401(k) plans, plan amendments must now be made by no later than December 31, 2026. Special deadlines generally apply to collectively bargained plans (December 31, 2028) and governmental plans (December 31, 2029), and to other special cases.
NOTE: For non-calendar year plans, the deadline extension may be effectively less than one full year, since under the prior scheme the deadline could have extended beyond December 31, 2025. For example, for plans having a plan year running from July 1st through June 30th, the amendment deadline would previously have been June 30, 2026. Under the Notice, the deadline is now extended until December 31, 2026 – an additional six months.
Plan Sponsor Has Ultimate Responsibility
Keep in mind that, although many plan administrators will rely on outside sources (such as third-party administrators, legal counsel or other professionals) to draft the actual plan amendments, the employer as plan sponsor always bears ultimate responsibility to ensure that all required plan amendments are drafted accurately and are timely executed.
CAUTION: Other Plan Amendments May Still Be Required!
Although the deadline for amending plans to comply with the legislation specified in Notice 2024-2 has been extended beyond the 2025 calendar year, employers may still need to amend their plans sooner for other reasons. For example, any discretionary plan amendments that a 401(k) plan sponsor may wish to make, unrelated to these acts – such as amendments modifying the plan’s entry date requirements, changing the vesting schedule, or adding a new distribution option — generally must be adopted by the end of the plan year in which the desired plan changes become effective.
Notice Contains More Guidance.
Notice 2024-2 contains numerous other provisions — including provisions interpreting various SECURE 2.0 mandates — that affect 401(k) plans. We will be following up with one or more blogs on these aspects of the new guidance shortly.
NOTE: This article is intended as a general overview of Notice 2024-2 as it affects the extended plan amendment deadline for most 401(k) plans, and is not meant to address the other provisions contained in the Notice, details of plan qualification, plan amendments generally, other types of retirement plans (such as defined benefit plans or 403(b) plans), or previous or related IRS or other official guidance. As always, be sure to consult with your own ERISA attorney or other professional advisor for individualized advice with respect to your plan’s unique situation.