When should a user of an IRS-preapproved document adopt its SECURE 2022 provisions?

I’m now reviewing a draft of a plan’s restatement. (The draft is not from the recordkeeper, nor my firm.)

The IRS-preapproved documents lack items to specify which of SECURE 2022’s optional provisions the plan includes or omits.

For whatever plan amendment ought to be done by December 31, 2026, the plan sponsor (following its internal business reasons) wants to do everything now.

What’s an effective way to document the plan’s SECURE 2022 optional provisions (without defeating reliance on the IRS’s opinion letter on the IRS-preapproved documents)?

Or is the plan sponsor’s preference to document now its SECURE 2022 provisions unwise?

This question is being asked by many and my take on it is there is no definitive answer and all suggested solutions have imperfections.

Some of the larger mass submitters have made available to plan providers a SECURE amendment that can be adopted by December 31, 2026.  This amendment includes choices tailored to the mass submitter document addressing the SECURE optional provisions.  It is worth asking the mass submitter if they have this amendment available as a time-saver.  Further, I expect that the IRS will be more accepting of an amendment provided by the mass submitter rather than amendment provided by another source.

Some practitioners appear to be holding back on adopting a SECURE amendment in anticipation of being able to get the Cycle 4 document executed in 2026.  This is a our industry's version of playing chicken (for those who haven't seen Rebel Without a Cause, it worth looking it up).

Absent the above, hopefully plan sponsors have captured documentation of the administrative decisions they have made AND communicated to participants.  If a plan sponsor has not done this, then they should be encouraged to adopt a SECURE amendment this year.

We are communicating the available choices to our clients and allowing them to provide input. So far, less than a handful have asked for an amendment now and this is because they each have a need now to amend the plan.

Thank you!

If the designer of the IRS-preapproved documents now or soon (before 2026 ends) offers a SECURE amendment:

May a plan sponsor use such an amendment without defeating reliance on the IRS’s opinion letter on the IRS-preapproved documents?

Is there a Revenue Procedure or some other IRS guidance that allows this?

The process for authoring and obtaining IRS approval for pre-approved documents does not guarantee that any amendment made by the mass submitter also is pre-approved, and certainly no custom amendment by a plan provider is also considered pre-approved.  That being said, mass submitters have for years issued interim amendments to their plans to cover changes in laws and regulations effective after the effective date of the LRMs on which the pre-approved documents were based. 

Operationally, the ability to make amendments is needed for situations like plan terminations where the plan termination amendment catches up the document to be consistent with current requirements.  We obviously are in a new environment with the extended delay in deadlines to adopt plan amendments so there is more exposure to a plan that is continuing and is not being terminating.

That being said, I have not seen or heard of an instance where an amendment to a plan prepared by the mass submitter for their document and used by a plan provider as been rejected by the IRS.

To add to what others have said, no pre-approved document provider will have reliance on a SECURE amendment because IRS will not have reviewed and approved the amendment at the time of adoption. Our understanding is that the underlying pre-approved document still has reliance; only the amendment does not. When the pre-approved provider obtains their Cycle P4 opinion letter, the new letter will cover many, but not all, of the optional SECURE 2.0 provisions. This has been the case for previous cycles. You will recall that in Cycle P3, because of timing issues, pre-approved documents could not contain hardship withdrawal provisions that complied with the final Regs. We amended our Cycle P2 plans for the proposed Regs and then for the final Regs (separate stand-alone amendments without reliance), adopted Cycle P3 plans that did not comply with the final Regs, and then immediately amended again to comply (separate stand-alone amendment without reliance). So, we had reliance on a document that contained "old" language and did not have reliance on the amendment that complied with final Regs. SECURE 2.0 will be similar. I anticipate that we'll have Cycle P4 opinion letters end of August (maybe), but we'll likely amend many of our plans for SECURE 2.0 before that to avoid having to amend them ALL before the end of the year. (And I have to doublecheck, but I seem to recall that we were not allowed to include ALL SECURE 2.0 provisions in our pre-approved document, so those wouldn't be covered anyway even if we're able to amend a plan before the end of the year using our P4 document.)  

I'd have no problem amending for SECURE 2.0 now and, in fact, we have for a few of our plans, especially if we were amending for something else this year anyway.

EBP, thank you for "cracking the code" for me.