COVID-19 Alert for Plan Sponsors: Deadline Extensions for 403(b) and Defined Benefit Plans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, extends several key deadlines for 403(b) and defined benefit plan sponsors.

• 403(b) remedial amendment period extended to June 30, 2020: The law extends the initial remedial amendment period for 403(b) plans from March 31, 2020 to June 30, 2020. This gives plan sponsors three additional months to update or restate their pre-approved and individually designed 403(b) plan documents. Original instructions for the program, which give plan sponsors the opportunity to fix mistakes in their plan document retroactive to Jan. 1, 2010, can be found here. In keeping with the original provision, the new law doesn’t extend to operational failures.

• Single-employer defined benefit contribution relief until Jan. 1, 2021: Single-employer defined benefit plan sponsors can delay minimum funding contributions until Jan. 1, 2021. Employers will remain responsible for paying interest on the delayed contribution amounts at the plan’s effective rate.

• Pre-approved defined benefit plan extensions: The deadline for employers to adopt a pre-approved defined benefit plan and submit a determination letter under the second six-year remedial amendment cycle has been moved from April 30, 2020 to July 31, 2020. Similarly, the end of the second six-year remedial amendment cycle for pre-approved defined benefit plans has been moved from April 30, 2020 to July 31, 2020. The third six-year remedial amendment cycle for pre-approved defined benefit plans will now begin Aug. 1, 2020, and the end date will remain Jan. 31, 2025. The submission period for opinion letter applications will still begin Aug. 1, 2020 and end July 31, 2021. Plan sponsors can expect the Internal Revenue Services (IRS) to issue guidance on the extensions to the second and third six-year remedial amendment cycles in the near future. The original instructions for the pre-approved plan program can be found here.

The CARES Act also gives the Department of Labor authority to delay certain deadlines under the 1974 Employee Retirement Income Security Act (ERISA). Your BDO representative is available to answer any questions and help you understand the impact the COVID-19 pandemic has on your business and employee benefit plans.