News & Insights
2021 Legislative Changes Plan Sponsors Need to Know
November 24th, 2021
By Zack Skrzyniarz |
It seems like yesterday. The cliché is certainly true for 2021, not that long ago that we were preparing for the year 2021 and anticipating changes that were going to occur. Now 2022 is within reach. Before we jump too far ahead, let’s take a moment to focus on key 2021 legislative changes Plan Sponsors will want to watch or review as we close out 2021.
CARES Act and SECURE Act
In a big way, both legislative acts impacted the 2021 year (or Plan Year ends December 31, 2020). To review the ins and outs of these Acts, I recommend reviewing the “Changes to Your Employee Benefit Plan: SECURE Act and CARES Act” article written by Monica Terry. That said, a few things to keep in mind as 2021 closes out:
- Plan Sponsors have until the end of the 2022 plan year (for calendar years) or the end of the Plan year starting in 2022 (for non-calendar years) to adopt an amendment reflecting changes to the plan related to the SECURE Act provisions. If you are a Plan Sponsor, please make sure you are reaching out to your TPAs to amend your plans as necessary.
- For Plans and Plan Sponsors that elected the provisions of the CARES Act on distributions and loans, Plan Sponsors have until the end of the 2022 plan year (for calendar years) or the end of the Plan year starting 2022 (for non-calendar years) to amend their plans formally.
- For Plans and Plan Sponsors that adopted the distribution provisions of the CARES Act, you will want to pay close attention when completing year-end tax forms (such as W-2’s, 1099’s, etc.) if participants have elected to pay back any distributions received through the three-year provision. This would include recognizing a CARES Act distribution as income over a three-year period (see previously referenced article for further details on this provision).
- Lastly, the SECURE Act implemented a notable change relating to long-term part-time employees. Under the provision, those who work greater than 500 hours but less than 1,000 hours over three consecutive years will be eligible to participate in the Plan. Although eligibility doesn’t actually start until 2024, the three-year period began in 2021. As a Plan Sponsor, if you tend to have these types of employees, you will want to start tracking eligibility of the three-year provision in 2021.
Rules and regulations affecting employee benefit plans continue to evolve. It’s a lot to follow, but we have you covered. The Employee Benefit Plan team at Maner Costerisan is available to help with all issues related to your plan, including changes required by the SECURE and CARES Act.