SECURE 2.0 Act – Section 316. Extended Time to Adopt Plan Amendments to Increase Benefit Accruals
Section 316 of the SECURE 2.0 Act (SECURE 2.0) provides additional time for employers to adopt amendments to increase benefit accruals in the preceding plan year.
The original SECURE Act included provisions allowing employers to adopt a new plan retroactive to the prior year, provided that the employer approved the adoption of the plan no later than the employer’s extended tax return due date.
Section 316 of the SECURE 2.0 builds on this expanded amendment deadline to include amendments that increase benefit accruals for the preceding plan year (other than increasing matching contributions).
For example, assume that a profit-sharing plan provided for a profit-sharing contribution of 2% of compensation as of December 31, 2022, the last day of the plan year. Under this change, the employer would be permitted to amend the plan at any time up through the employer’s extended tax return due date (i.e., October 15, 2023) to increase the amount of the 2022 profit-sharing contribution to 3% or any higher amount.
This extended amendment deadline, which is first effective for stock bonus, pension, profit-sharing or annuity plan years beginning after December 31, 2023, does not apply to amendments that decrease benefits or make other plan-related changes.
If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at [email protected].
This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.
About SECURE 2.0
SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.
This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.
The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.
About Schneider Downs Retirement Solutions
Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
