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Automatic Rollover Rules Effective Date?


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Notice 2005-5 says that the automatic rollover rules apply to governmental plans.

However, it says that a governmental plan "will not be treated as failing to satisfy the requirements of § 401(a)(31)(B) if the automatic rollover provisions are not applied to mandatory distributions from such plans that are made prior to the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after January 1, 2006."

Question: What about a governmental plan that isn't sponsored by a governmental employer that has a "legislative session," such as a governmental hospital that is controlled by a local board? Would that type of governmental plan have the delayed compliance date, or would it have to comply by the date applicable to ERISA plans (March 28, 2005)?

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Yes. I see that for TRA '86 the IRS specifically stated that the extended amendment dates applied to what I would call "non-legislative" governmental entities. For example:

FINAL-REG §1.401(k)-1. Certain cash or deferred arrangements

For purposes of this paragraph (b)(1), the term governing body with authority to amend the plan means the legislature, board, commission, council, or other governing body with authority to amend the plan.

Notice 2005-5 isn't that specific, but I agree that the extended compliance date was probably supposed to apply to "non-legislative" governmental entities.


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