IRS releases 2024 required amendment list for retirement plans

The IRS recently issued Notice 2024-82 to provide the 2024 Required Amendments List (“RA List”) for individually designed qualified retirement plans and Section 403(b) plans. 

Background

Following the elimination of the five-year staggered remedial amendment cycles effective Jan. 1, 2017 (Rev. Proc. 2016-37), the IRS changed the timing rules for adopting amendments to existing individually designed plans, particularly for required amendments. The deadline for required amendments is now generally based on the RA List, which is published annually by the IRS.

If an item appears on the RA List for a particular year, the plan sponsor must adopt any amendments needed to conform to the item no later than the end of the second calendar-year beginning after the item first appears on the list. This timing rule also applies to non-calendar-year plans. For example, an amendment required by the 2024 RA List generally must be adopted by the end of the 2026 calendar-year, regardless of the plan year.  

Note that the deadline for discretionary amendments — that is, generally those not required as a result of a law change — is typically the last day of the plan year in which the discretionary change is first effective, with potentially earlier deadlines for certain types of discretionary amendments.

2024 required and optional changes

The IRS has historically divided the RA List into two parts (Parts A and B), but this year the IRS added a new third part (Part C). The three parts are briefly described below:  

• Part A: Covering changes that generally would require an amendment to most plans or to most plans of the type affected by the change 
• Part B: Covering changes that the IRS anticipates will not require amendments to most plans but might require an amendment because of an unusual plan provision in a particular plan 
• Part C: Covering changes that relate to optional plan provisions previously adopted

The IRS explained that the new Part C covers optional changes in the law that plans are not required to adopt, but if a plan does, the plan generally must comply with certain specified administrative guidance that has been issued by the IRS with respect to the optional change.

The 2022 and 2023 RA Lists did not include any required amendments. The 2024 RA List does not include any required amendments under Part A. but does include two under Part B and an extensive list of required amendments under new Part C for those plans that have adopted the specified optional changes.

Part B contains the following changes in requirements that might require an amendment because of an unusual plan provision:

• Application of Section 415 limit for certain employees of rural electric cooperatives (SECURE 2.0 Act section 119): Eliminated the compensation-based limit on participants who are non-highly compensated employees and participate in a rural electric cooperative retirement plan, effective for plan years beginning after 2023.
• Reform of family attribution rule (SECURE 2.0 Act section 315): Amended Section 414 to eliminate automatic attribution of ownership between spouses with separate businesses in community property states. The amendment also modified the attribution rules regarding ownership between parents and minor children, for purposes of applying the rules relating to a controlled group of corporations under Section 414(b) or an affiliated service group under Section 414(m), effective for plan years beginning after Dec. 31, 2023.

Part C contains changes in requirements that relate to optional plan provisions previously adopted, including, but not limited to, the following:

• Guidance for coronavirus-related distributions from retirement plans under the CARES Act. Under section 2202 of the CARES Act, plans may provide for in-service coronavirus-related distributions. Notice 2020-50 provides guidance with respect to this optional provision.
• Guidance on waiver of 2020 required minimum distributions (RMDs) (Notice 2020-51), transition relief and guidance relating to certain RMDs (Notice 2023-31), and Certain RMDs for 2024 (Notice 2024-35). Guidance is provided with respect to these optional RMD provisions.
• Certain exceptions to the 10% additional tax under Section 72(t). Under section 115 of the SECURE 2.0 Act, certain plans may permit emergency personal expense distributions. Under section 314 of the SECURE 2.0 Act, certain plans may permit domestic abuse victim distributions. Notice 2024-55 provides guidance with respect to these optional provisions.

As noted, Part C includes an extensive list of required amendments that may need to be adopted by plans that have adopted one or more of the specified optional changes. Plan sponsors should review the full Part C list carefully to determine the extent to which any of the amendments must be adopted.  

In addition, the notice explains that the following periodic changes, even though they are not directly referenced in the RA List, are automatically included:

• The various dollar limits that are adjusted for cost-of-living increases under the Code
• The spot segment rates used to determine the applicable interest rate under Section 417(e)(3)
• The applicable mortality table under Section 417(e)(3).

As noted, the deadline for required amendments is now generally based on the RA List, except as otherwise provided by statute or in regulations or other guidance published by the IRS in the Internal Revenue Bulletin. In this regard, the IRS mentions that there have been a number of legislative changes to the qualified and Section 403(b) plan rules by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the Taxpayer Certainty and Disaster Tax Relief Act of 2020, and the SECURE 2.0 Act of 2022 (SECURE 2.0 Act). The SECURE 2.0 Act, as extended by IRS Notice 2024-2, provides that the general required amendment deadline for the changes made by these legislative acts is Dec. 31, 2026, provided certain other terms and conditions are satisfied (for example, operating the plan in accordance with any changes that were effective or adopted before the amendment deadline).

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