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Ret plans - amendments required, incl. EGTRRA


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[Official Guidance] Employee Stock Ownership Plan (ESOP) LRM and Information Package, October 2017 (PDF)
43 pages. Oct. 2017, published online Nov. 2017. "This information package contains samples of plan provisions that satisfy certain requirements of the Code applicable to ESOPs. Such language may or may not be acceptable in specific plans depending on the context in which used. To expedite the review process, plan sponsors are encouraged to use the language in this package. A partnership or a joint venture is not eligible to maintain an ESOP. However, a partnership or a joint venture that has elected to be taxed as a corporation may be a Participating Employer as defined in this ESOP LRM." [Editor's note: the Oct. 2017 revision appears to replace the version released in June 2015.] (Internal Revenue Service [IRS])
[Official Guidance] Cash or Deferred Arrangement LRM and Information Package, October 2017 (PDF)
43 pages. Oct. 2017, published online Nov. 2017. "This information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code... Note that these CODA LRMs assume the plan will permit catch-up contributions (defined in Code Section 414(v)) for participants age 50 and over and Roth Elective Deferrals (defined in Section 402A)." [Also online: 45-page red-lined version showing changes from the previous (October 2011) version.] (Internal Revenue Service [IRS])
Year-End Compliance Issues for Single-Employer Retirement Plans (PDF)
"This [article] looks at key areas -- including administrative compliance issues -- that sponsors of such defined benefit or defined contribution plans should address by Dec. 31, 2017." (Milliman)
IRS Issues Model Amendments for Bifurcated Distribution Options (PDF)
"Plan sponsors may limit the extent that bifurcation is available with respect to a participant's accrued benefit. Other limitations may include the number of forms of distribution among which an accrued benefit may be bifurcated or the combinations of forms of distribution that are made available. The model amendments include language that allow for these limitations." (Prudential)
IRS Clarifies Use of Effective Date Addendums to Pre-Approved 403(b) Plan Documents
"Adoption of the pre-approved document itself may not take into account plan provisions that were in effect at varying times during this period.... The IRS has taken the position that such plans may continue to rely on their pre-approved opinion or advisory letter if they create an 'effective date addendum' to the plan document." (Ascensus)
[Guidance Overview] When Must Discretionary Amendments to a 403(b) Plan be Adopted?
"The Remedial Amendment Period (RAP) for 403(b) plans ends on March 30, 2020 for plan sponsors using IRS pre-approved 403(b) plan documents.... [W]hat happens if a plan sponsor changed the operation of the plan but did not adopt an amendment reflecting that change? ... The answer 'appears' to be that the plan can be retroactively amended when it is restated.... [T]his is one area where the rules for qualified plans differ from the rules for 403(b) plans." (FIS Relius)
[Guidance Overview] Understanding Pre-Approval of 403(b) Plans
"In March 2017, the [IRS] began issuing advisory and opinion letters to the first preapproved retirement programs described in Internal Revenue Code Section 403(b) ... [This] article discusses preapproved 403(b) plans, including their advantages, legal pitfalls, and other issues that an eligible employer may consider when determining whether to convert its existing 403(b) plan into a preapproved plan." (Venable LLP)
[Discussion] Timing of Corrective Amendment for 2016 and Going Forward for 2017
"We have a client that has allowed participants into the match portion of the plan earlier than the document allows. We are doing a corrective amendment for 2016, but can we also do a corrective amendment now for 2017? My concern is that I thought that a corrective amendment was only available after the plan year ended. Client has changed the entry conditions for match to tie to those of the deferral with an amendment effective August 1, 2017. But there is still the issue of the period from 1/1/17 to the date of amendment." (BenefitsLink Message Boards)
[Guidance Overview] IRS Preapproved Plan Program Gets a Makeover (PDF)
"Plan sponsors of individually designed plans may want to consider this guidance if they are considering moving to a pre-approved plan document. And plan sponsors who already use pre-approved plans may want to review the guidance to see what changes will be coming. Of course, these new defined contribution documents will not be available for a few more years." (Groom Law Group, via TAXES The Tax Magazine)
IRS Modifies Preapproved Retirement Plan Program
"The modifications are designed to further the IRS's stated intention to encourage sponsors of individually designed plans to transition to a preapproved plan format. However, the changes are relatively modest and most large plan sponsors will likely find other ways to mitigate their higher compliance risk since the curtailment of the individually designed determination letter program. The IRS plans to continue enhancing and expanding the preapproved plan program 'in whole or in part, from time to time, with some of the changes based on comments from program users." (Willis Towers Watson)
[Guidance Overview] IRS Has Revised Its Qualified Plans Correction Program to Address the Determination Letter Program Changes (PDF)
"This column discusses the major changes made to the Employee Plans Compliance Resolution System (EPCRS) by Revenue Procedure 2016-51 to address the determination letter program changes.... [1] Determination letter requirement for self correction eliminated ... [2] Requirement (or ability) to apply for a determination letter as part of EPCRS eliminated ... . [3] IRS VCP fees and schedules moved ... [4] IRS audit cap sanctions revamped to address the lack of a recent determination letter ... [5] Plan amendment and plan document failures clarified." (Groom Law Group, via Journal of Pension Benefits)
[Guidance Overview] IRS Notice 2017-44 Provides Model Amendments to a DB Plan Document to Add Bifurcated Benefit Distribution Options
"Plan sponsors may: [1] Limit the extent to which a participant's accrued benefit may be bifurcated; [2] Specify the number of forms of distribution among which an accrued benefit may be bifurcated; [3] Limit the combination of forms of distribution available for bifurcation. Notice 2017-44 provides examples of acceptable ways a plan may limit bifurcation of a participant's accrued benefit." (Thomson Reuters Practical Law)
[Discussion] Handwritten Amendment to Plan Document?
"On November 30, 2016 plan sponsor decides they want to change the safe harbor match formula from plan year to pay period effective January 1, 2017. They call the vendor, vendor says no way it is too late as the safe harbor notice is due the next day. Plan sponsor decides to hand write on the document crossing out plan year and writing in pay period. Required signatures and dates are written in to the margin as well as the execution page making it clear their intent. Plan sponsor changes the safe harbor notice by typing the notice and just changing plan year to pay period. Plan sponsor delivers the safe harbor notice timely with pay period wording. Plan sponsor sends the hand-written amendment and signatures to the vendor. Vendor refuses to honor the hand-written changes. Are handwritten amendments acceptable?" (BenefitsLink Message Boards)
[Official Guidance] Text of IRS Notice 2017-44: Model Amendments to Add Bifurcated Distribution Options to Defined Benefit Plans (PDF)
12 pages. "This notice provides model amendments that a sponsor of a qualified defined benefit plan may use to amend its plan document to offer bifurcated benefit distribution options to participants in accordance with final regulations issued under Section 417(e) of the [Code] ... [A] plan that provides for a bifurcated distribution option is not required to include this specific model language. The sponsor of a plan that currently provides for bifurcated distributions under plan terms that comply with the provisions of Section 1.417(e)-1(d)(7), relating to either implicit or explicit bifurcation, does not need to amend those plan terms. In addition, use of the model language by an employer that has adopted a pre-approved plan will not cause the plan to fail to be identical to the pre-approved plan." (Internal Revenue Service [IRS])
IRS Issues New Procedures for Pre-Approved Plans (PDF)
"Over the years, the IRS has expanded its Pre-Approved Program and lessened the distinctions between different Pre-Approved Plan types. The new program continues this trend by making the Pre-Approved Plan program much more straight-forward and cost effective. This is beneficial to organizations sponsoring Pre-Approved Plans and adopting employers. The new program also helps the IRS in dealing with its budget and staff issues, by encouraging the use of Pre-Approved Plans rather than individually-designed plans." (ASC)
IRS Requests Input on Upcoming Presentation on Pre-Approved Plans Opinion Letter Program
"[IRS is] developing a [video] presentation on this topic and would like your input on what to include ... The presentation will cover: [1] Merger of the 'master and prototype' and 'volume submitter' programs; [2] Differences between standardized and non-standardized plans; [3] Opinion letter application period for defined contribution plans; [4] Other changes made by Revenue Procedure 2017-41. [Send an email to the IRS at tege.outreach@irs.gov] by 5 p.m. ET on September 1, 2017 with any suggestions for this presentation." (Internal Revenue Service [IRS])
[Discussion] 'Scrivener's Error' in Document Preparation
"Plan is new comparability design, 3 classes. Adoption Agreement allows allocation for each class to be: [1] a percentage of compensation; [2] a fixed dollar amount; [3] the greater of method 1 or 2. Plan design always was intended to be method 3 (greater of% or $) -- and plan always has used method 3 in operation. When preparing a PPA restatement effective Feb. 1, 2015, we mistakenly checked box 1 instead of box 3. This error was missed when doing the 1/31/2016 year-end valuation, but we've caught it now. Can we simply document the error and correct that page of the Adoption Agreement?" (BenefitsLink Message Boards)
[Discussion] Retroactive Amendment, Self-Correction, Pre-Approved Plan
"Client has a pre-approved 401(k) plan. Recently discovered error allowing early inclusion of noneligible employees following purchase of company. Employees of purchased company were allowed to enter plan immediately; however, plan requires one year of service. Client would like to retroactively amend plan to allow immediate entry into plan for these employees in conjunction with the purchase. Rev. Proc. 2016-51, Appendix B, Section 2.07 allows correction by plan amendment and requires submission of the amendment to the IRS for a determination letter. Section 6.05 states that determination letters shall not be submitted with the VCP application and addresses determination letters and pre-approved plans under VCP or Audit CAP (but does not mention SCP). Can anyone confirm for me that if we correct through SCP with a retroactive amendment to a pre-approved plan whether we are required to submit the amendment (i.e. the plan) for a determination letter?" (BenefitsLink Message Boards)
Why Do I Need to Restate My 403(b) Plan Document?
"What is the deadline for getting this done? ... What if we don't restate our plan? ... Is there any benefit to this process other than the IRS Pre-Approval? ... How do I select a consultant to do this work? ... What about the investments? ... The insurance company will give me a low cost document and some investments they chose. Isn't that sufficient?" (QBI)
IRS Issues 2017 Cumulative List for Pre-Approved Defined Contribution Plans
"Providers of pre-approved defined contribution plans and their advisors should carefully review the 2017 Cumulative List to ensure that their plan documents and opinion letter applications address all of the issues that the IRS has identified.... Beginning with the 2017 Cumulative List, the Cumulative Lists no longer apply to individually designed plans; instead, the IRS has begun to issue an annual Required Amendments List for these plans[.]" (Thomson Reuters / EBIA)
[Guidance Overview] IRS Revamps Pre-Approved Qualified Plan Program (PDF)
"Sponsors of master and prototype and volume submitter plans will want to take this new guidance into account, and in the case of defined contribution plans, prepare for a filing season to begin October 2, 2017. Sponsors should also watch for anticipated updated 'LRMs' which may be released in the near future. Many of these changes appear to be designed to make pre-approved plans more attractive and usable in place of individually designed plans[.]" (Groom Law Group)
[Discussion] PPA Restatement and Plan Termination After Dissolution of Plan Sponsor
"Let's say the plan was a one-person profit sharing plan. The sponsor was the sole participant's medical professional association. The participant died in 2014. The plan provides that the plan terminates upon dissolution of the plan sponsor. I believe the P.A. might have been dissolved in 2013. The plan never was formally terminated or paid out. Would the plan need a PPA restatement?" (BenefitsLink Message Boards)
IRS Paves the Way for More Preapproved Plans
"A pre-approved plan may have either of two formats: an adoption agreement and basic plan document or a single plan document; a money purchase pension plan can now be combined with either a 401(k) or profit-sharing plan; an ESOP can now include a 401(k) feature, but it must be a nonstandardized plan; a Cash Balance plan may now provide that the rate used to determine an interest credit be based on the actual return on plan assets (not a subset of plan assets), but it must be a nonstandardized plan[.]" (Findley Davies | BPS&M)
[Guidance Overview] IRS Updates the Pre-Approved Plan Document Program
"The most significant change outlined in [Rev. Proc. 2017-41] is the restructuring of the M&P and VS programs into a single Opinion Letter program with two types of plan documents: Standardized and Nonstandardized. This change eliminates the distinctions between M&P and VS plans and expands the Nonstandardized Plan program to allow for greater flexibility in plan features and options (in effect, Nonstandardized plans will fill the role traditionally filled by VS documents)." (FIS Relius)
[Guidance Overview] IRS Makes Major Changes to Qualified Pre-Approved Plan Program
"Nonstandardized plans may be customized, within IRS limits, without becoming individually designed plans.... The program now includes nonelecting church plans. A nonstandardized plan may allow hardship distributions of elective deferrals for non-safe harbor reasons. The IRS will no longer review and approve a plan's trust or custodial agreement and will require that the trust agreement or custodial account agreement be in a document separate from the plan." (Ascensus)
[Guidance Overview] IRS Revises Opinion Letter Procedures for Pre-Approved Plans, Issues 2017 Cumulative List
"The M&P Plan and VS Plan programs are combined and replaced by a single opinion letter program for standardized plans and nonstandardized plans ... A pre-approved plan may have one of two formats: as an adoption agreement plan or a single document plan ... An adopting employer of a nonstandardized plan may adopt minor modifications to the plan ... A money purchase plan may be combined with a 401(k) plan or a profit-sharing plan in the same pre-approved plan document.... A nonstandardized plan that contains an employee stock ownership plan (ESOP) may include a 401(k) plan ... A cash balance plan may now permit the rate used to determine an interest credit to be based on the actual return on plan assets." (Thomson Reuters Practical Law)
IRS Overhauls Opinion Letter Process for Pre-Approved Plans, Combines Prototype and Volume Submitter Programs
"The overhaul of the pre-approved plan program is not surprising given the IRS's significant reduction of the determination letter program for individually designed plans ... Comments are specifically requested regarding the possibility of allowing adopting employers to continue to maintain certain 'legacy' benefit formulas (such as frozen or continuing benefit formulas for certain participants due to a merger or acquisition) when adopting a pre-approved plan." (Thomson Reuters / EBIA)
[Official Guidance] Text of IRS Notice 2017-37: Cumulative List of Changes in Plan Qualification Requirements for Pre-Approved Defined Contribution Plans for 2017 (PDF)
11 pages. "This notice contains the Cumulative List of Changes in Plan Qualification Requirements for Pre-Approved Defined Contribution Plans for 2017 ... Cumulative Lists identify changes in the qualification requirements of the Internal Revenue Code that are required to be taken into account in a pre-approved plan document submitted under the pre-approved plan program administered by the [IRS] and that will be considered by the IRS for purposes of issuing opinion letters. The 2017 Cumulative List is to be used to submit opinion letter applications for pre-approved defined contribution plans during the third six-year remedial amendment cycle, which began February 1, 2017, and ends January 31, 2023 ... Defined contribution plans may be submitted for approval during the on-cycle submission period, which begins October 1, 2017, and ends October 1, 2018." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Rev. Proc. 2017-41: Changes to Opinion Letter Program for Pre-Approved Retirement Plans (PDF)
"This revenue procedure sets forth [procedures] for issuing Opinion Letters regarding the qualification in form of Pre-approved Plans under Sections 401, 403(a), and 4975(e)(7) of the Internal Revenue Code [and combines] the master and prototype (M&P) and volume submitter (VS) programs into a new Opinion Letter program. [It also] modifies and supersedes, in part, Rev. Proc. 2015-36 ... and modifies Rev. Proc. 2017-4 ... and Rev. Proc. 2016-37[.] [It also] modifies the on-cycle submission period for the third six-year remedial amendment cycle for Providers of pre-approved defined contribution plans so that it begins on October 2, 2017 and ends on October 1, 2018. [It also] modifies the IRS's historic approach to Pre-approved Plans in order to expand the Provider market and encourage employers that currently maintain individually designed plans to convert to the pre-approved format." (Internal Revenue Service [IRS])
Adopting a New Pre-Approved 403(b) Document? It's a Good Time for a Plan Compliance Review (PDF)
"[P]lan sponsors will need to take care that they choose a pre-approved document that can accommodate their plan design, and, once they select an appropriate document, that all of the plan's provisions are correctly restated on the new document.... [The authors] have compiled [a] high level list of provisions that bear scrutiny. This is not a complete list, but it highlights some common areas where the operation of the plan may not be consistent with the terms of the document or with applicable law[.]" (Boutwell Fay LLP)
[Guidance Overview] Changes to Puerto Rico's Tax Code and Trust Act Could Impact HCEs
"The Act sets the threshold for HCEs to $150,000 (currently $120,000 in the U.S., and previously the threshold under P.R. law). This HCE threshold is fixed, while the U.S. threshold is subject to cost-of-living adjustments.... Limits on per-participant contributions to defined contribution plans are currently the same under both the P.R. and U.S. tax codes: the lesser of 100% of compensation or $54,000. The Act limits contributions to the lesser of 25% of 'net income' or $75,000." (Willis Towers Watson)
[Guidance Overview] Recent Legislation Impacts Puerto Rico Tax-Qualified Retirement Plans
"[S]ome of the main changes adopted by the Act include ... New maximum on contributions ... New definition of Highly Compensated Employee (HCE) ... New safe harbor for Cash or Deferred Arrangement (CODA) Plans ... Although the Act was effective immediately and, technically speaking, requires Puerto Rico qualified plans to adopt amendments incorporating its provisions ... PR Treasury officials informally instructed [practitioners] ... to wait before adopting and implementing the Act until PR Treasury examines the scope of the new qualification requirements and issues guidance regarding their implementation." (McConnell Valdes)
Protecting Your Qualified Retirement Plan Now That the IRS Determination Program Is (Mostly) Closed
"[A] more practical solution is to continue the discipline forced by the old determination program and use that discipline for systematic reviews of ongoing compliance. This does not mean constant full-scale review, but rather setting up a system to ensure that key elements of the plan document and administration will be reviewed periodically[.]" (Proskauer's ERISA Practice Center)
[Official Guidance] Text of IRS Memo for EP Rulings and Agreements Staff: Changes in Tax Exempt Quality Management System (TEGMS) and Mandatory Review Standards (PDF)
"Effective May 1, 2017, ... the following applications are subject to mandatory review: [1] Cases with interested party comments.... [2] Terminations with reversions of more than $5,000,000; and two percent of all other terminations. [3] Technical advice requests.... [4] Proposed adverse determination cases.... [5] Variable annuity plans. [6] Cases designated by a Determinations Manager, Determinations Area Manager or the Manager, EP Ruling & Agreements QA." [TE/GE-07-0417-0018, Apr. 28, 2017] (Internal Revenue Service [IRS])
[Guidance Overview] Puerto Rico Modifies Requirements for Qualified Retirement Plans
"Several of the modifications create new disparities between rules under the Puerto Rico and U.S. tax codes, such as those for identifying highly compensated employees (HCEs) for nondiscrimination testing, which could complicate plan administration. The act, by its terms, takes effect immediately although Hacienda (the Puerto Rico Treasury Department) will need to address how the changes apply in various situations, such as when determining HCE status for purposes of 2017 testing and where the nominal effective date is other than the start of a plan year." (Willis Towers Watson)
[Official Guidance] Adopters of Pre-Approved Defined Contribution Plans Get One-Day Deadline Extension
"The IRS has extended the deadline from Sunday, April 30, 2017, to Monday, May 1, 2017, for certain employers to adopt a defined contribution pre-approved plan and apply for a determination letter, if permissible. Notice 2016-03 previously extended the deadline from April 30, 2016, to April 30, 2017, to help employers who wanted to convert their existing individually designed plan into a current defined contribution pre-approved plan based on the 2010 Cumulative List." (Internal Revenue Service [IRS])
[Guidance Overview] Puerto Rico Legislation May Require Changes to Retirement Plans
"Act No. 9-2017 revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer deductions for retirement plan contributions. Questions remain about how and when to implement these changes, but the 2017 Act became effective immediate upon enactment, so plan sponsors should be prepared for the possibility of mid-year 2017 changes to their retirement plans." (National Law Review)
[Official Guidance] Text of IRS Request for Comments on Revisions to Form 5300: Determination for Employee Benefit Plans
"[T]he IRS is soliciting comments concerning Form 5300, Application for Determination for Employee Benefit Plans.... Form 5300 is used to request a determination letter from the IRS for the qualification of a defined benefit or a defined contribution plan and the exempt status of any related trust ... There are revisions being made to the form at this time." (Internal Revenue Service [IRS])
[Guidance Overview] Deadline for Plan Sponsors to Submit Qualification Amendments with the Puerto Rico Treasury Is Fast Approaching
"[P]lan sponsors or participating employers using the calendar year as the tax year that have adopted 'qualification amendments' during 2016, must submit such amendments with the Puerto Rico Treasury on or before April 15, 2017 ... The term 'qualification amendment' is limited to the [certain] modifications[.]" (Littler)
[Guidance Overview] IRS Issues Guidance to Correct Defective 403(b) Plans
"[A]mendments must be retroactive to January 1, 2010, so a correction could cover a lot of years. If a plan was administered based on a defective plan document, that failure would also need to be corrected retroactively using EPCRS. Employers will need to collect information from 2010 forward as to what amendments have been made to the 403(b) plan and when, as well as to whether operation was consistent with those plan terms." (Ice Miller LLP)
[Guidance Overview] Avoid Overpaying User Fees for Your VCP Submission
"The Employee Plans Voluntary Compliance function (VC) has noticed an increase in submissions with incorrect user fees. Many of these submissions include user fees higher than what is required.... Plan sponsors need to refer to Rev. Proc. 2017-4, Appendix A.08 to determine the appropriate VCP user fees for submissions made in 2017. As of February 1, 2016, we lowered the user fees for many types of 401(a) and 403(b) plan VCP submissions. Only use the 2016 version of Form 8951 (Rev. Sept. 2016), Compliance Fee for Application for Voluntary Correction Program (VCP), to determine specific user fee amounts; don't use the pre-2016 versions of this form as they contain inaccurate information." (Internal Revenue Service [IRS])
[Guidance Overview] The 2017 Operational Compliance List
"For 2017, the Operational Compliance List includes ... [1] QNECs and QMACs in defined contribution plans ... [2] Extension of temporary nondiscrimination relief for closed defined benefit pension plans ... [3] Partial annuity distribution options for defined benefit pension plans ... [4] Cash balance/hybrid plans final regulations." (Findley Davies | BPS&M)
Qualified Retirement Plans in 2017 and Beyond: Resources and Considerations for Employers
"The Required Amendments List is not exhaustive ... Operational compliance may be required prior to plan amendment ... Reliance on existing determination letters is limited." (Caplin & Drysdale)
[Guidance Overview] Using the New IRS Remedial Amendment Period Rules (PDF)
28 pages. "To properly consider the consequences of this effective elimination of the type of determination letter program ... it is important to understand when qualified retirement plans may be amended retroactively.... [If] an employer or other plan sponsor has unlimited ability to retroactively amend a plan, it becomes relatively unimportant whether the IRS will issue a determination letter saying the form of the plan appears consistent with the Tax Code requirements for qualified retirement plans." (Utz & Lattan, LLC)
[Official Guidance] Text of IRS Operational Compliance List, Calendar Years 2016 and 2017
"The Operational Compliance List is provided per Rev. Proc. 2016-37, Section 10, to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements effective during a calendar year.... Effective in 2017: [1] Proposed Regulations regarding QNECs and QMACs in defined contribution plans ... [2] Extension of temporary nondiscrimination relief for closed defined benefit pension plans ... [3] Final regulations regarding partial annuity distribution options for defined benefit pension plans ... [4] Final regulations regarding cash balance/hybrid plans ... [5] Application of benefit restrictions for certain defined benefit plans." (Internal Revenue Service [IRS])
[Guidance Overview] IRS Fact Sheet: How to Self-Correct Defective 403(b) Plan Provisions During the Remedial Amendment Period
"During the [remedial amendment period], sponsors of both 403(b) pre-approved plans and 403(b) individually designed plans are eligible to correct plan provisions that fail to meet IRC Section 403(b) requirements (including those under the 403(b) regulations and subsequent guidance) either by: Adopting a 403(b) pre-approved plan by March 31, 2020, that has a 2017 opinion or advisory letter; [or] Amending their individually designed plan by March 31, 2020." (Internal Revenue Service [IRS])
[Guidance Overview] New Determination Letter Procedures for Puerto Rico Retirement Plans
"Unlike the IRS, Hacienda is not restricting determination letters to establishing and terminating a qualified retirement plan (and a few other special circumstances). Hacienda continues to require sponsors to file determination letters for many types of plan amendments, and sponsors may seek determination letters for other amendments as well. All new plans must obtain a determination letter from Hacienda to become qualified." (Willis Towers Watson)
[Guidance Overview] Puerto Rico Treasury Updates Rules for Obtaining Retirement Plan Qualification Letters (PDF)
"Previously ... plan sponsors and other service providers would have had to submit all plan document restatements and amendments for a qualification letter. Now, under CL 16-08, plan restatements and/or amendments that do not contain 'Qualification Amendments' do not need to submit another application to Hacienda for a favorable determination on the qualified status of the retirement plan." (Conduent)
[Guidance Overview] Puerto Rico Modifies Requirements for Qualified Retirement Plans and Trusts
[Act No. 9-2017] amends the Trust Act to provide an enhanced protection of trust assets against creditor's claims, incorporate the concept of 'retirement plan trust' ... protect the surviving spouse of a retirement plan participant by recognizing him/her as the beneficiary of the plan's death benefits ... and reduce the uncertainty and court intervention when there is a change in trustee. The Act also amends the PR Code in an effort to ease the establishment and operation of retirement plans in Puerto Rico, particularly those established by small employers and owner-employees." (McConnell Valdes)
[Guidance Overview] IRS Announces the Last Day of the Remedial Amendment Period for 403(b) Plans
"[T]he remedial amendment period is available only if an employer adopted a written plan document intended to satisfy the requirements of Code Section 403(b) on or before January 1, 2010 or, if later, the first day of the plan's effective date.... [If] the form of a Code Section 403(b) retirement plan does not satisfy the requirements of Code Section 403(b) during the remedial amendment period but is properly retroactively amended by March 31, 2020, the plan will be considered to have satisfied the requirements for the entire remedial amendment period[.]" (Proskauer's ERISA Practice Center)
[Guidance Overview] Remedial Amendment Period for 403(b) Plans Ends March 31, 2020
"Although the IRS has not yet issued any determination letters for pre-approved 403(b) plans, it is expected that it will do so soon ... The IRS has never offered a program for individually-designed 403(b) plans to obtain determination letters that plan documents are in compliance with the 403(b) Plan Rules, and has discontinued its regular determination letter program for individually-designed qualified plans, such as pension and 401(k) plans. Accordingly, it is unlikely that plan sponsors will be able to obtain IRS approval that individually-designed 403(b) plans are in compliance with the 403(b) Plan Rules." (Kilpatrick Townsend)
[Guidance Overview] Sponsors of Pre-Approved 403(b) Plans Need to Request Opinion or Advisory Letters by March 31, 2020
"[T]he last day of the remedial amendment period for Section 403(b) plans will be March 31, 2020.... While it is unclear when they might again be permitted to file, the cycle for qualified plans is a six-year cycle. If applied to Section 403(b) plans, this would mean that there will not be another opportunity to file until about 2025 or 2026." (Venable LLP)
[Guidance Overview] IRS Provides Long-Awaited Guidance on Initial 403(b) Plan Remedial Amendment Period (PDF)
"The IRS first announced that it would be issuing guidance on the remedial amendment period for 403(b) plans in Revenue Procedure 2013-22, where it set forth the procedures for requesting and issuing opinion and advisory letters for pre-approved 403(b) plans. No such opinions or advisory letters have been issued yet, but some applicants have been informed that the review of their plans has been completed, and informal comments from IRS suggest they should start to come out in a few months." (Groom Law Group)
Window for Fixing Current 403(b) Documents to Close in 2020 (PDF)
"IRS will allow 403(b) plan sponsors until March 31, 2020 to correct document defects and/or adopt a pre-approved plan restatement ... The remedial amendment period is available only if an employer adopted a written plan intended to satisfy the 403(b) requirements on or before January 1, 2010, or the plan's effective date, if later (the first day of the plan's remedial amendment period)." (Conduent)
IRS Exempts Some Small Employer Plans from User Fee for Determination Letter Applications
"Effective January 1, 2017, the [IRS] ... said that to simplify eligibility for user-fee exemptions, an application for a determination letter related to a pension, profit-sharing, stock bonus, annuity, or employee stock ownership plan (ESOP) maintained by a small employer will be treated as being filed within a qualifying open remedial amendment period if the plan didn't exist before January 1 of the 10th calendar year before the year in which the application is filed.... Small-employer plans are defined by the IRS in the notice as having no more than 100 employees." (HR Daily Advisor)
[Guidance Overview] Puerto Rico Treasury Issues New Guidance on Rules and Procedures for Qualification of Retirement Plans
"CL 16-08 provides that qualification letters issued under the Puerto Rico Internal Revenue Code of 2011... will continue to be valid as long as the official plan document or trust agreement is not amended to add, modify, or remove (in whole or in part) any plan provision considered a 'qualification amendment,' as defined in CL 16-08.... CL 16-08 clarifies that only plan restatements and/or plan amendments that include amendments classified as 'qualification amendments' have to be submitted for qualification.... This new guidance keeps the qualification amendments of the Previous Guidance, but also adds additional types of amendments that will be considered qualification amendments." (Littler)
[Guidance Overview] Proposed Amendments to the Retirement Plan Provisions of the Puerto Rico Internal Revenue Code
"HR 3 amends the Trust Act to provide enhanced protection of trust assets, incorporate the concept of 'retirement plan trust', protect the surviving spouse of a retirement plan participant, and reduce uncertainty and litigation when there is a change in trustee. HR 3 also amends the PR Code to ease the establishment of retirement plans in Puerto Rico, particularly by small employers and owner-employees." (McConnell Valdes)
[Guidance Overview] The Birth of the First-Ever IRS Pre-Approved 403(b) Plan Documents
"[E]mployers have maintained 403(b) plans beginning in 1959, well before 401(k) plans were even a glimmer in anyone's thoughts. Employers will, for the first time need to restate their plans to reflect a 'real' plan document ... The restatement period will be a three-year period ending on March 31, 2020. The IRS plans on issuing their approval letters (opinion letters for prototype plans and advisory letters for volume submitter plans) on the plans that have been submitted by March 31, 2017. Once the letters are issued, employers can start restating their plans." (National Tax-Deferred Savings Association [NTSA])
[Guidance Overview] IRS Relaxes Rules on Use of Forfeitures to Fund Safe Harbor Contributions
"[To] apply these changes, plan documents will need to be amended to remove the language that restricts the use of forfeitures to fund safe harbor contributions.... Since this change is discretionary, an amendment would need to be adopted by the last day of the plan year to which it applies. In addition, an earlier amendment might be needed to avoid violating the anti-cutback rules (IRC Section 411(d)(6)) depending on how forfeitures are handled under a plan sponsor's current plan." (FIS Relius)
[Guidance Overview] Correcting 'Best Guesses' on 403(b) Plan Terms by Using the First Remedial Amendment Period Under Rev. Proc. 2017-18
"Considering there have been generations of administrators and vendor staffs which have used a variety of different methods to operate 403(b) plans, [implementing the 2007 plan document requirement] was bound to be a difficult one. And it has been.... 403(b) written plan documents needed to be adopted by January 1, 2010 ... If you timely adopted a plan document (or adopted a new one since January 1, 2010), the terms of that document are unlikely to comply with what we think the rules are, given what we have found through the pre-approval process[.]" (Business of Benefits)

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