The Internal Revenue Service (the “IRS”) has released Notice 2009–98: the 2009 Cumulative List of Changes in Plan Qualification Requirements (the “2009 Cumulative List”). In general, the Cumulative List identifies the changes in qualification requirements that must be taken into account when an application for an opinion, advisory or determination letter is submitted and reviewed by the IRS. The 2009 Cumulative List contains all of the changes in statutes, regulations and guidance that have become effective since December 31, 2001. Thus, the 2009 Cumulative List includes the plan qualification requirements discussed below in addition to those plan qualification requirements included in the 2004, 2005, 2006, 2007, and 2008 Cumulative Lists.
The 2009 Cumulative List applies primarily to the plan sponsors of individually designed defined contribution plans (including ESOPs) and defined benefit plans (“individually designed plans”) that fall in Cycle E. Individually designed plans are reviewed by the IRS on a five-year remedial amendment cycle. (See Rev. Proc. 2005–66 as modified by Rev. Proc. 2007–44.) As a general rule, the five-year cycle is determined by the last digit of the plan sponsor’s employer identification number (“EIN”). Plans with EINs ending in the numbers 5 or 0 fall in Cycle E. Cycle E is also available on a one-time basis to Cycle D Plans whose first plan year beginning on or after January 1, 2009 ends on or after February 1, 2010 and certain governmental plans for which the plan sponsor made an election to treat Cycle E (instead of Cycle C) as the plan’s initial EGTRRA remedial amendment period. The remedial amendment period for Cycle E begins on February 1, 2010 and ends on January 31, 2011.
In this review cycle, the IRS said that it will not consider in its review of any determination letter application for the submission period that begins Feb. 1, 2010, any:
- guidance published after Oct. 1, 2009;
- statutes enacted after Oct. 1, 2009;
- qualification requirements first effective in 2011 or later; or
- statutory provisions that are first effective in 2010 for which there is no guidance identified in the 2009 cumulative list.
The 2009 cumulative list doesn’t include any of those items. However, to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2009 cumulative list, and terminating plans must include all changes in statutes, regulations and guidance in effect at the time of termination.
The IRS also included special rules in Notice 2009–98 for the Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”) and the Worker, Retiree, and Employer Recovery Act of 2008 (“WRERA”). Plans submitted in Cycle E must meet the amendment deadline for the HEART Act, if applicable. However, the IRS will not consider the HEART Act in issuing determination letters because no guidance has been issued with respect to the HEART Act and, thus, these letters cannot be relied on with respect to the HEART Act. Similarly, the IRS said plans must meet the amendment deadline for WRERA but it will not review Cycle E submissions for compliance with WRERA and, thus, any letters it issues to Cycle E filers cannot be relied on concerning WRERA.
The 2009 Cumulative List includes the following new plan qualification requirements listed, generally, by section of the Internal Revenue Code (the “Code”).
401(a)
Guidance published in Notice 2008–98 provides that the IRS intends to amend the normal retirement age regulations to change the effective date for governmental plans to plan years that begin on or after January 1, 2011. Newer guidance has suggested that the IRS intends to amend this date to January 1, 2013.
401(a)(9)
Under the final regulations under Code § 401(a)(9), governmental plans were permitted to comply with the required minimum distribution rules of Code § 401(a)(9) by using a reasonable and good faith interpretation of the statute.
401(a)(35)
WRERA § 109(a) amended the definition of one-participant retirement plan under Code § 401(a) (35)(E)(iv).
401(k) & 401(m)
- HEART Act § 107 extends the applicability of the qualified reservist distribution to individuals called to active duty after December 31, 2007.
- Final regulations under Code § 401(k) on qualified automatic contribution arrangements were published.
- Revenue Ruling 2009–30 provides information on automatic contribution increases under automatic contribution arrangements.
- Notice 2009–65 provides sample amendments that plan sponsors can use to add automatic contribution features to their plans.
- Final regulations under Code § 401(m) on qualified automatic contribution arrangements were published.
402(c)(11)
WRERA § 108(f) requires that plans provide for non-spouse beneficiary rollovers effective for plan years beginning after December 31, 2009.
402(f)
WRERA § 108(f)(2) amended Code § 402(f)(2)(A) with respect to the definition of eligible rollover distribution.
402(g)(2)
WRERA § 109(b)(3) amended Code § 402(g) (2)(A)(ii) to eliminate the distribution of gap period earnings with excess deferrals.
411(a)(13)
WRERA § 107(b)(2) amended Code § 411(a)(13)(A).
411(b)(5)
WRERA § 107(b)(1) amended Code § 411(b)(5).
414(w)
- WRERA §§ 109(b)(4), (5), and (6) amended Code §§ 414(w)(3), (4), and (5) respectively.
- Final regulations under Code § 414(w) on eligible automatic contribution arrangements were published on February 24, 2009.
- Revenue Rulings 2009–30 and 2009–39 provide information on automatic contribution increases under automatic contribution arrangements.
- Notice 2009–65 provides sample amendments that plan sponsors can use to add automatic contribution features to their plans.
415
WRERA § 103(a) changed the deadline to adopt amendments to conform to the provisions of the Pension Funding Equity Act of 2004 from the end of the 2008 plan year to the end of the 2009 plan year.
415(b)(2)(E)(v)
WRERA § 103(b)(2)(B)(i) amended Code § 415(b)(2)(E)(v).
417(e)(3)(D)(i)
WRERA § 103(b)(2)(A) amended Code § 417(e)(3)(D)(i).
432
- WRERA § 204 provides a temporary delay of designation of multiemployer plans in endangered or critical status.
- Notice 2009–31 as modified by Notice 2009–42 provides election and notice procedures for multiemployer plans under WRERA § 204.
- Revenue Procedure provides procedures with respect to the revocation of elections by multiemployer plans to freeze funded status under WRERA § 204.
- WRERA § 205 provides for the temporary extension of the funding improvement or rehabilitation periods for multiemployer plans in endangered or critical status for 2008 or 2009.
- Notice 2009–31 as modified by Notice 2009–42 provides election and notice procedures for multiemployer plans under WRERA § 205.
Hurricane Relief
- Notice 2008–87 provides relief in connection with certain employee benefit plans because of damage caused by Hurricane Ike.
- The Emergency Economic Stabilization Act of 2008 provides temporary relief for areas damaged by the 2008 Midwestern severe storms, tornadoes, and flooding by applying Code § 1400Q and the Katrina Emergency Tax Relief Act of 2005 to any Midwestern disaster area.
Miscellaneous
- Revenue Rulings 2009–31 and 2009–39 provide guidance with respect to annual paid time off contributions.
- Revenue Rulings 2009–32 and 2009–39 provide guidance with respect to annual paid time off contributions at termination of employment.
WRERA
- WRERA § 201(a) added Code § 401(a)(9)(H) which provides a suspension of the minimum distribution requirements for 2009 applicable to defined contribution plans.
- Notice 2009–82 provides guidance relating to the suspension of the minimum distribution requirement for 2009 applicable to defined contribution plans.
We would be glad to answer questions about any of these provisions or about updating your plan(s) accordingly.
