Deadline Extended for Retirement Plan Amendments to Conform to Recent Laws

By Alistair M. Nevius, J.D.

The IRS has extended by one year the deadline for retirement plans to make amendments required by the Pension Protection Act, P.L. 109-280 (PPA), and last year’s Worker, Retiree, and Employer Recovery Act, P.L. 110-458 (WRERA) (Notice 2009-97). The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010. The previous deadline had been the last day of the first plan year that began on or after January 1, 2009. The IRS granted the extension to give plan sponsors time to comply with recently released final regulations, as well as regulations the IRS anticipates releasing soon.

The extension applies to three types of plan amendment deadlines:

  • The deadline for amendments to singleemployer defined benefit plans to meet the requirements for funding-based limits on benefits under Sec. 401(a)(29) and benefit accruals under Sec. 436;
  • The deadline for amending cash balance and other applicable defined benefit plans to meet the requirements of Sec. 411(a)(13) relating to vesting and other special rules applicable to these plans; and
  • The deadline for amending applicable defined contribution plans to meet the requirements of Sec. 401(a)(35), relating to diversification requirements for certain defined contribution plans.

 Amendments made to single-employer defined benefit plans to meet the requirements under Secs. 401(a)(29) and 436 that are made by the extended deadline will not be subject to the anti-cutback provisions of Sec. 411(d)(6) (despite the January 1, 2009, deadline contained in PPA Section 1107). However, the notice does not grant relief from the anti-cutback provisions for amendments adopted after the last day of the first plan year that begins after January 1, 2009 (or 2011 in the case of a Sec. 414(d) governmental plan), if the amendments do not relate to Secs. 401(a)(29) and 436 or Sec. 411(b)(5).

The PPA added Secs. 436, 411(a) (13), and 401(a)(35) to the Code. Sec. 436 imposes funding-based limits on benefits and benefit accruals under single-employer plans. Sec. 401(a)(29) (amended by PPA) requires single-employer defined benefit plans that are subject to the minimum funding requirements of Sec. 412 to meet the requirements of Sec. 436.

Sec. 411(a)(13) contains special rules for cash balance and other applicable defined benefit plans. Sec. 401(a)(35) requires certain defined contribution plans to meet certain diversification requirements with respect to investments in employer securities.

Newsletter Articles

SPONSORED REPORT

Year-End Tax Planning and What’s New for 2016

A look at year-end tax planning strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

PRACTICE MANAGEMENT

CPAs Contend With Tax ID Theft

Tax-related identity theft fraud remains a widespread problem that is often difficult for victims and their tax preparers to correct.