IRS Delays Plan Amendment Timetable

The IRS said in Notice 2009-97 released Friday that plans now have until the last day of the first plan year that begins on or after January 1, 2010, to have the amendments in place.  The extension, the agency said, is “In order to give plan sponsors time to adopt plan amendments that take into account recently issued final regulations and those that are expected to be issued in the near future…” http://www.irs.gov/pub/irs-drop/n-09-97.pdf

According to the tax agency, the extended deadline applies to amending:

• single-employer defined benefit plans to meet the requirements of 401(a)(29) and 436, relating to funding-based limits on benefits and benefit accruals. Section 436, which was added by section 113(a)(1) of the PPA, imposes funding-based limits on benefits and benefit accruals under single-employer plans. The requirements of 436 generally apply to plan years that begin after December 31, 2007;
• cash balance and other applicable defined benefit plans, within the meaning of 411(a)(13)(C), to meet the requirements of 411(a)(13) (other than 411(a)(13)(A)) and 411(b)(5), relating to vesting and other special rules applicable to these plans. Section 411(a)(13), which was added by section 701(b)(2) of PPA ’06, contains special rules for cash balance and other applicable defined benefit plans. Section 411(a)(13)(A) provides, in general, that an applicable defined benefit plan will not fail to satisfy the requirements of 411(a)(2), 411(c), or 417(e) solely because the present value of the participant’s accrued benefit under the plan equals the balance in the participant’s hypothetical account; and
• applicable defined contribution plans, within the meaning of  401(a)(35)(E), to meet the requirements of 401(a)(35), relating to diversification requirements for certain defined contribution plans. Section 401(a)(35), which was added by section 901(a)(1) of the PPA, requires certain defined contribution plans to meet certain diversification requirements with respect to investments in employer securities. The requirements of 401(a)(35) generally apply to plan years that begin after December 31, 2007.

Cycle E Plans

IRS Notice 2009-98 contains the 2009 Cumulative List of Changes in Plan Qualification Requirements described in section 4 of Rev. Proc. 2007-44, 2007-2 C.B. 54.

The 2009 Cumulative List is to be used primarily by plan sponsors of individually designed plans that are in Cycle E. An individually designed plan is in Cycle E if it is a single employer plan where the last digit of the employer identification number of the plan sponsor is 5 or 0, or it is a 414(d) governmental plan for which an election has been made by the plan sponsor to treat Cycle E as the initial EGTRRA remedial amendment cycle for the plan.