PPA - 90 --> 180 day notice requirement

[J. Bringhurst]

I cannot seem to find a definitive answer on whether the increase from 90 days to 180 days under the PPA for participant notice/spousal consent requirements applies to notices distributed after December 31, 2006 or annuity starting dates commencing after December 31, 2006. Obviously, if it applies to the latter, notices will have to be revised now to apply to distributions made after December 31, 2006. Thoughts?

[David MacLennan]

I looked at the statute and the Explanation by the Joint Tax Committee, and it only says it applies to years beginning after Dec 31 2006. My take is that is applies to ASD's for plan years beginning after 12/31/2006. I don't see this as a problem for the ASD, since they have lengthened the consent period, but as a courtesy one could inform the participants that the 90 day period mentioned in the distrib forms has changed. So for lump sums, the distribution might occur later than the participant expects - without the update that the 90 day period has changed to 180 days, the participant could conceivably complain "Hey wait Mr. Plan Administrator, you can't pay me out, my consent period expired" (not very likely a complaint as we know). For annuity forms of payment you have presumably fixed your ASD in the distrib forms and the greater 180 day period won't change anything. Now if they had amended the 30 day period that would cause the ASD's to possibly change and new distrib forms might be in order.

[J. Bringhurst]

Thank you...I also looked at the Act and the Explanation but had been told by a consulting firm that the IRS had unofficially indicated that the effective date relates to the provision of the notice rather than the ASD. It's kind of academic, as you note, but I like clarity. Are you amending your plans at this point for the PPA or waiting for regulations?