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SMMs. Some advisors may reasonably conclude that an interim SMM (i.e., a "pretend" SMM if you prefer) may (or should) be distributed in advance of the amendment to describe the intended interim operation of the plan pending the eventual adoption of an amendment, and then a revised SMM can be distributed (if need be) after the actual amendment is adopted (if the amendment modified the content of the interim SMM). That is why employers are currently struggling with how to draft safe harbor notices that reflect how the plan will be operated in 2019 (if such notices have, until now, referred to the suspension of deferrals upon a hardship distribution). DEADLINE FOR AMENDMENT. I agree that the reference to the Required Amendment List is not applicable to all plans. The proposed regulation is merely presenting an example: "For example, with respect to an individually designed plan that is not a governmental plan, the deadline for amending the plan to reflect a change in qualification requirements is the end of the second calendar year that begins after the issuance of the Required Amendments List described in section 9 of Rev. Proc. 2016-37 that includes the change." That deadline is consistent with Revenue Procedure 2016-37's general procedures for NON-preapproved plans, i.e., "individually designed plans" that are not governmental plans. I disagree that preapproved plans can wait until the end of the six-year cycle, as that would render Section 15.04(1) of the new Procedure meaningless. Preapproved Plans. Section 15.04(1) of IRS Revenue Procedure 2016-37 provides the deadline for required interim amendments for preapproved plans as being the time described by Regulation 1.401(b)-1(b)(3) (i.e., generally the time of the tax filing deadline following the plan year of implementation). (As an aside, my cites to Procedure 2016-37 include the leading zero after the period, e.g., Section 15.04, as does the text of that Revenue Procedure. I observe, however, that the IRS (oddly) fails to use the leading zero at the start of each numbered subsection, i.e., ".4" rather than ".04" as would was typically used in the past. I am, however, looking at an advance copy, so maybe that was changed in the final copy. Whatever.) Revenue Procedure 2016-37 follows the general template established by Revenue Procedure 2007-44. Why else would the new Procedure still contain the same language of the prior Procedure that "[the extension of the remedial amendment period applies to a good-faith amendment] if the amendment was adopted timely and in good faith with the intent of maintaining the qualified status of the plan. It goes on to say "The Service will make the final determination in all cases as to whether a new plan or an amendment was adopted with the good faith intention of being qualified or maintaining qualified status." If we had until the end of the six-year cycle to adopt every amendment, why bother adopting an amendment at all. Just restate. There would be no "good faith interim" amendments as described by Sections 15.03(1). Sections 15.03(1) and 15.03(2) set forth the general rules that have been with us since IRS Revenue Procedure 2007-44, i.e., that perfecting amendments (usually restatements) are required by the end of the six-year remedial amendment period, at which time any restatement will reflect (or otherwise incorporate) the employer's intent expressed in all the interim good-faith amendments that were timely adopted during six-year remedial amendment period. The language of IRS Revenue Procedure 2007-44 did not excuse the absence of timely adopted required interim amendments in 2007, and the same language appears in the new Procedure, so I infer that the new Procedure does not excuse the absence of timely adopting required good faith amendments throughout the six-year cycle. If the content of such amendments represent a good faith attempt to comply with a change in law, but fail on some technicality, then such amendment itself be retroactively amended for such technicalities discovered by the end of that cycle (during the restatement window). Such technicalities are usually resolved by the document provider when negotiating preapproved language for the then-current cycle (which will be Cycle 4 for these changes, not Cycle 3 - the Cycle 3 documents will reflect only the changes published in the 2017 Cumulative List). As in the past, employers that do not adopt a timely interim amendment must be able assert a good reason for not doing so, otherwise it would be unnecessary for Section 15.03(2) of the current procedure to say (as the IRS stated in Revenue Procedure 2007-44) that "...if an employer makes such a determination [that no amendment was required] and the IRS finds that an amendment is required, the plan would still be eligible for the six-year remedial amendment cycle to correct the disqualifying provisions described in section 15.02. The IRS will make the final determination in all cases as to whether the determination that no interim amendment was required was reasonable and in good faith." Query: Can employers and advisors reasonably and in good faith determine that no timely adopted interim amendment is required under Section 15.03(2) for a change the statutory and regulatory changes to the hardship distribution rules? If not, then the amendment is either "required" (go to Section 15.04(1) for the deadline) or the amendment is "discretionary" (go to Section 15.04(2) for the deadline). If we choose to characterize this amendment as a discretionary amendment under 15.04(2) rather than a required amendment under Section 15.04(1), then we can say with certainty that the earliest possible deadline is the end of the plan year of implementation (12/31/2019 at the earliest). Thus, no one can go wrong by waiting to adopt the amendment until the second half of 2019 for an amendment, and employers with preapproved plans should therefore target the second half of the 2019 plan year for evaluating such an amendment's content. Some providers have a "draft" version available for inspection and feedback. The IRS can also choose to extend the deadline for a particular set of changes in the law, but has not done so, to date, for this set of changes. TAXPAYER RELIANCE. I also observe that the proposed regulations do not appear to me to contain, as they often do, a statement of "taxpayer reliance." That means Treasury reserves the right to back-track on its guidance. When a proposed regulation comes with reliance, Treasury explicitly promises, within the proposed regulation, that no retroactive subsequent amendment will be required because of a change in the guidance, i.e., taxpayers "may rely" on the proposed regulation, and that "any more restrictive provision in the final regulation will not be retroactively effective." Since I can find no such statement to that effect in this regulation, I think that should give everyone pause. I offer below a potential reason why the IRS (i.e., Treasury) might choose not to commit itself to what it stated in the proposed regulation, though perhaps it is not a good example because the potential change I have in mind would be a liberalization of the regulation. The IRS is perhaps waiting to observe any push-back on one of the provisions of the proposed amendment, as follows. Controversy. Recall that the proposed regulation states that employers will NOT have the option of continuing to suspend deferrals after 2019, which is a BIG issue for some employers and advisors that want to continue having that requirement in the plan as a permanent provision. Maybe that's why Treasury didn't offer reliance on the proposed regulations - it is still thinking about issues like that. And just the thought of Treasury still thinking about these issues is sufficient reason for document providers to hesitate providing "the amendment." Suppose, for example, document providers follow the proposed amendment and say that no suspension of deferrals may be imposed for hardship distributions made on or after 1/1/20, and then Treasury changes its mind, and lots of employers want to keep the suspension provision, and thus will need to amend the earlier-adopted amendment (and SMM) that document providers rushed to market. I would prefer to wait and make sure that's the final rule about the permanent impermissibility of suspensions before giving employers an ultimatum, in the form of a signed amendment, that the suspension provisions cannot be continued for hardship distributions after 2019, only to turn around and issue a subsequent amendment (and SMM) saying that they are permitted after 2019 (under my imaginary scenario that Treasury reconsiders this issue and changes its mind). PESKY NEWSLETTERS. Just because a zillion law firms are trying to rustle up document business via a newsletter doesn't mean it's a good idea. Some firms even issued newsletters (can you imagine?) suggesting all the great things an employer can do after one employer in this country received a very narrow and technical Private Letter Ruling dealing with an unusual plan design whereby nonelective distribution that was disguised as a self-enrolled matching contribution was available, but only if the participant was a member of a certain group, and otherwise the participant received only the ordinary but "real" matching contribution. So because the "no contingent benefit" rule was determined by the IRS as not having been violated for that employer, now every employer in the country wants to try to do the same thing with a PPA preapproved plan. Nowhere in that Ruling was there a determination as to whether such a design could be used by a preapproved plan (the senior IRS document policy staff determine what's permitted and what isn't), nor for that matter, did the Ruling even opine on the qualified status of the plan at issue (since a PLR is not a determination letter). Providers were flooded with calls as to how to set up such a miracle plan. What percentage of those newsletters went into detail regarding all the testing, document, and potential administrative issues associated with such a complex design? How many newsletters suggested alternative and more conventional ways to assist with student debt relief? Any newsletter that omitted the gory details and potential alternatives was not useful. How many "hardship" newsletters detail all the administrative and unresolved compliance issues associated with the cessation of the suspension of deferrals upon a safe harbor hardship distribution? Or is their focus on the need for an "immediate" amendment? If the latter, what is their rationale for an immediate amendment in the absence of final guidance that offers "reliance"? WHAT WE HAVE HERE. Let's give Treasury some credit. Treasury wanted to, and did, issue sufficient information for employers to determine how plans should begin transitioning in operation, which is why many provisions of the proposed regulations apply to distributions beginning in 2020. More importantly, the regulations provided guidance on how to handle the cessation of the suspension of deferrals, e.g., employers will not need to stop suspending (i.e., the potential need to resume) deferrals at the stroke of midnight on New Year's Eve (this coming January 1st) simply because that is the effective date of the new law (depending on a plan's exact language (or an administrative procedure's exact language) as to what occurs at the end of a suspension period). That had been an open question prior to the proposed regulation. Now we can all enjoy our New Year's Eve and not look for all the plans that automatically restart deferrals at the end of a suspension period (which, until this guidance was issue, could reasonably be presumed to be January 1, 2019), i.e., plans that had suspension periods that had started in the second half of 2018 but that also automatically reinstate deferrals when the suspension period ends - or, in this case, might have potentially been required to end the suspension on 1/1/19 because of a change in the statute having an effective date of the first day of the 2019 plan year). Last, but not least, we now know that plans will be able to continue offering hardship distributions for casualty losses as defined prior to this most recent change to the personal tax deduction section of the Code for casualty losses (for those plans that referred to that Section of the Code). WHAT'S THE RUSH? Preapproved plan document providers should not be in a hurry to get an amendment out for the sake of getting an amendment out. Employers should not be in a hurry to get a comprehensive amendment adopted for the sake of getting an amendment adopted. The only rush is trying to determine what employers want to do in response to what we know are the most likely options, and that is not an easy task. Suppose one document provider has one set of default provisions (thinking most employers want those provisions), and another document provider has another set of default provisions (with the same thought). That will be fun. Document providers have been known to talk to each other, so maybe there will be some informal consensus on what defaults to use. When it is clear how the plan will be operated, e.g., whether employers will or will not acquiesce to the default provisions of document providers' "blanket" (prototype sponsor) amendments, then there should be a movement toward updating the language of the plan via an amendment. Or, if the employer is ready to do so now - then draft an amendment. Just don't expect providers to rush to market on this set of regulatory changes. The expansion of source accounts available for hardship distributions is relatively straightforward. If that were the only design issue involved, I suspect amendments would already start to be offered by providers and adopted by employers. But the suspension of deferrals (or the timing of the cessation thereof), and the need to amend the technical definition of a casualty loss, and other changes mentioned in this column, represent a can of worms for those who need to adjust all the moving parts under the hood, both for the document and for the administrator. The devil, as always, is in the details, including but not limited to (in this context) what the payroll service providers can do sooner rather than later. There's no point in adopting an amendment regarding deferrals until you are sure the payroll service provider can and will comply with the employer's (or provider's) amendment(s).