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Guest Article

(From the October 17, 2011 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Listings of Required Modifications Are Updated to Reflect Changes in 2010 Cumulative List

The IRS updated its Listings of Required Modifications (LRMs) for defined contribution plans and cash-or-deferred arrangements to reflect many of the changes identified under the 2010 Cumulative List for plans that will be submitted for determination in the current cycle.

The Cumulative List identifies the changes in plan qualification requirements that will be examined by the IRS in connection with an application for determination that is filed in the upcoming submission cycle. Notice 2010–90, published on December 27, 2010, contains the 2010 Cumulative List that applies to Cycle A submissions made from February 1, 2011 to January 31, 2012. The new changes to the application for this year include:

Normal Retirement Age — Change in the effective date of the Code § 401(a) definition for governmental pension plans.
Minimum Required Distributions — Suspension of the 2009 minimum required distributions under Code § 401(a)(9).
Diversification Requirements — Final regulations under Code § 401(a)(35) regarding defined contribution plans that hold publicly traded employer securities.
HEART Act — New Code § 401(a)(37) requirements regarding payment of benefits where a participant dies performing qualified military service; the extension of qualified reservist distributions under Code § 401(k) to those called to active duty after 2007; and modifications under Code § 414(u) to provide benefit accruals for those who die or become disabled while performing qualified military service, and regarding the treatment of differential wage payments.
In-Plan Roth Rollovers — The new Code § 402A(c)(4) requirements.
Applicable Defined Benefit Plans — Changes under Code § 411(a)(13) with regard to the special vesting rules and under Code 411(b)(5) with regard to age.
Combined DB / 401(k) Plans — Special rules under new Code § 414(x) for such eligible combined plans.

Amendments required because of changes in the qualification requirements (e.g., changes in the Code or Federal Regulations) generally need to be adopted by the due date for filing the tax return (with extensions) for the employer's taxable year that includes the date the change became effective (or, if later, the last day of the plan year that the change became effective). Amendments that are not required — that is, discretionary amendments — must generally be adopted by the end of the plan year the change became effective. If so adopted and then timely submitted for determination (e.g., in accordance with the 5-year cycle established under Revenue Procedure 2007-44 for individually designed plans) the remedial amendment period is generally further extended so the employer will have until 91 days after the favorable determination letter is issued to make any IRS-required corrections to the amendments. See Revenue Procedure 2007-44, §§ 2.05, 5.03, 5.05 and 12.

The DC LRMs updated October 2011 include amendments to comply with above-listed changes regarding normal retirement age (LRM § 14A regarding money purchase/target benefit plans), minimum required distributions (LRM § 49 - Section 7), diversification requirements (LRM § 70A), HEART Act (LRM §§ 86 death or disability, and 4.7 differential pay) and in-plan Roth rollovers (LRM § 51). The CODA LRMS updated October 2011 include amendments to comply with the HEART Act (LRM § XVI reservist distributions), and additional in-plan Roth rollover provisions (LRM § III). Separately, LRM Changes to DB Plans released in September 2011 also include amendments regarding the definition of normal retirement age.

In terms of applicable defined benefit plans and the changes under Code §§ 411(a)(13) and 411(b)(5), this week the IRS released Notice 2011–85 which modifies the 2010 Cumulative List and postpones the deadline for adopting certain of the plan amendments.

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, Erinn Madden 202.220.2692, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955.

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.