Friday, December 11, 2009

IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments

Notice 2009-97 extends the deadline for amending qualified retirement plans to meet certain requirements of the Internal Revenue Code that were added by the Pension Protection Act of 2006 (PPA '06), Pub. L. 109-280, and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110-458. The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010.

Notice 2009-97: Extension of Limited PPA Amendments for Limited Plan Types — 12/14/2009 discusses how the Notice does not delay the amendment deadline for all most provisions:

Although this delay may be helpful for individually drafted plans that are unsure about language to use in PPA Amendments, Notice 2009-97 will not likely be of assistance for most retirement plans. Plans that make use of the Notice's extended deadlines will still need to be amended for a number of PPA provisions by the end of the 2009 plan year and will then need to amend by the end of the 2010 plan year for those provisions with a delayed amendment deadline.

The relevant PPA/Internal Revenue provisions with an extended amendment deadline include:

  • Internal Revenue Code final 436 regulations (published October 2009; affecting defined benefit plans): Benefit Restrictions (Prohibited Payments) and Benefit Accruals for Single Employer Plans. Funding based limits apply to (i) unpredictable/contingent benefits, (ii) accelerated benefit distribution, and (iii) benefit accruals. Participants must receive notice of funding based limitations within 30 days.
  • Internal Revenue Code section 411(a)(13) and 411(b)(5) (regulations not yet published; affects Cash Balance plans): Employer contributions must vest within three years of service. Affected plans may not cease benefit accruals because Participant attains a certain age.
  • Internal Revenue Code section 401(a)(35) (final regulations not yet published; affects plans invested in publicly traded employer securities):Plans invested in publicly traded employer securities will need to meet the diversification requirements set out in IRC 401(a)(35).

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