Guest Article

(From the December 6, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

2010 Deadline Is Extended for Adopting Certain Defined Benefit Plan Amendments

The deadline by which single-employer defined benefit plans must be amended to comply with the funding-based limits under Code § 436 - and cash balance plans must be amended to comply with the special vesting and certain other rules under Code § 411 - has been extended to the last day of the plan year beginning on or after January 1, 2011. The extension also applies for purposes of a plan's eligibility for the Code § 411(d)(6) relief provided under Notice 2009-97 for amendments that reduce a protected benefit in order to comply with those provisions.

Notice 2010-77 further extends the deadline for adopting certain defined benefit plan amendments as they were previously extended under Notice 2009-97. Instead of the last day of the first plan year beginning on or after January 1, 2010, the deadline is now extended to the last day of the first plan year beginning on or after January 1, 2011 for:

The earlier Notice also granted relief from the anti-cutback requirements of Code § 411(d)(6) for amendments that reduced or eliminated a protected benefit if the amendment was made only to the extent necessary to comply with Code §§ 436 or 411(b)(5) and was adopted by the end of the first plan year beginning on or after January 1, 2010. Recent Notice 2010-77 provides a one-year extension of the time by which such amendments must be adopted in order to be eligible for the Code § 411(d)(6) relief. With regard to the Code § 411(b)(5) amendments, the Notice points out:

Sponsors of cash balance and other applicable defined benefit plans are cautioned that filing a determination letter application may accelerate the time by which amendments must be adopted to comply with Code §§ 411(a)(13) and 411(b)(5). Applications submitted after January 31, 2011 will take into account the requirements of those Code sections including the related regulations which were issued in October 2010. Generally, sponsors with employer identification numbers ending in 1 or 6 will be in the filing cycle that runs from February 1, 2011 to January 31, 2012 (i.e., Cycle A). In contrast, the IRS will not take into account the Code § 436 requirements until its review of applications that are filed on or after February 1, 2012.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2010, Deloitte.