DEPARTMENT OF THE TREASURY TD 9484 contains final regulations under section 401(a)(35) of the Internal Revenue Code (Code) relating to diversification requirements for certain defined contribution plans holding publicly traded employer securities. These regulations will affect administrators of, employers maintaining, participants in, and beneficiaries of defined contribution plans that are invested in employer securities. IRC Section 401(a)(35) was added by the Pension Protection Act of 2006 (PPA) (Public Law 109–280—Aug. 17, 2006). The rules apply to plans holding "publicly traded employer securities" and will therefore not apply to most closely held ESOPs. In our Analysis of the IRC Section 401(a)(35) Proposed Regulations we discussed how the definition of "publicly traded" impacts many ESOP definitions which could create problems for thinly traded companies. IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments provided an extended amendment deadline. Related Links:
Internal Revenue Service
26 CFR Part 1
RIN 1545-BH04 The final regulations are effective on May 19, 2010 and applicable for plan years beginning on or after January 1, 2011.Prior Guidance:
Transition guidance was provided in IRS Notice 2006-107, 2006-51 I.R.B. 1114 - Diversification Requirements for Qualified Defined Contribution Plans Holding Publicly Traded Employer Securities. The transition guidance was extended in IRS Notice 2008-7 - Extension of Transitional Relief for Diversification Requirements for Certain Defined Contribution Plans. Proposed Treasury Regulation - REG–136701–07 - Diversification Requirements for Certain Defined Contribution Plans is effective for plan years beginning on or after January 1, 2009. For 2008, plans may rely on IRS Notice 2006-107 or the proposed regulations.
Thursday, May 20, 2010
Treasury Regulation [TD 9484] – Diversification Requirements for Certain Defined Contribution Plans
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