Guidance Provides Required Amendments List for Qualified Plans

2016 Required Amendments List for Qualified Retirement Plans

I. PURPOSE

This notice contains the Required Amendments List for 2016 (2016 RA List). Section 5.05(3) of Rev. Proc. 2016-37, 2016-29 I.R.B. 136, provides that, in the case of an individually designed plan, the remedial amendment period for a disqualifying provision arising as a result of a change in qualification requirements generally is extended to the end of the second calendar year that begins after the issuance of the Required Amendments List (RA List) in which the change in qualification requirements appears. Pursuant to section 5.05(3) of Rev. Proc. 2016-37, this notice provides that December 31, 2018 is the last day of the remedial amendment period with respect to a disqualifying provision arising as a result of a change in qualification requirements that appears on this 2016 RA List. As a result, under sections 8.01 and 5.05(3) of Rev. Proc. 2016-37, December 31, 2018 is also the plan amendment deadline for a disqualifying provision arising as a result of a change in qualification requirements that appears on the 2016 RA List. However, a later date may apply to a governmental plan (as defined in section 414(d)) pursuant to sections 8.01 and 5.06(3) of Rev. Proc. 2016-37.

II. BACKGROUND

Section 401(b) of the Internal Revenue Code provides a remedial amendment period during which a plan may be amended retroactively to comply with the qualification requirements under section 401(a). Section 1.401(b)-1 of the Income Tax Regulations describes the disqualifying provisions that may be amended retroactively and the remedial amendment period during which retroactive amendments may be adopted. Those regulations also grant the Commissioner the discretion to designate certain plan provisions as disqualifying provisions and to extend the remedial amendment period.

Rev. Proc. 2016-37 eliminates, as of January 1, 2017, the five-year remedial amendment cycle system for individually designed plans that was set forth in Rev. Proc. 2007-44, 2007-2 C.B. 54.

Sections 5.05(3) and 5.06(3) of Rev. Proc. 2016-37 extend the remedial amendment period for individually designed plans to correct disqualifying provisions that arise as a result of a change in qualification requirements. Under section 5.05(3), the remedial amendment period is extended to the end of the second calendar year that begins after the issuance of the RA List on which the change in qualification requirements appears. Section 5.06(3) provides a special rule for governmental plans (as defined in section 414(d)) that could further extend the remedial amendment period in some cases.

Section 8.01 of Rev. Proc. 2016-37 provides that the plan amendment deadline with respect to a disqualifying provision described in section 5 of Rev. Proc. 2016-37 is the date on which the remedial amendment period ends with respect to that disqualifying provision.

Section 9 of Rev. Proc. 2016-37 provides that the Department of the Treasury (the Treasury Department) and the Internal Revenue Service (IRS) intend to publish annually an RA List. In general, a change in qualification requirements will not appear on an RA List until guidance with respect to that change (including, in certain cases, model amendments) has been provided in regulations or in other guidance published in the Internal Revenue Bulletin. However, in the discretion of the Treasury Department and the IRS, a change in qualification requirements may be included on an RA List in other circumstances, such as in cases in which a statutory change is enacted and the Treasury Department and the IRS anticipate that no guidance will be issued.

III. CONTENT AND ORGANIZATION OF RA LIST

In general, an RA List includes statutory and administrative changes in qualification requirements that are first effective during the plan year in which the list is published. However, an RA List does not include guidance issued or legislation enacted after the list has been prepared¹ and also does not include:

• Statutory changes in qualification requirements for which the Treasury Department and the IRS expect to issue guidance (which would be included on an RA List issued in a future year);

• Changes in qualification requirements that permit (but do not require) optional plan provisions (in contrast to changes in the qualification requirements that cause existing plan provisions, which may include optional plan provisions previously adopted, to become disqualifying provisions);² or

• Changes in the tax laws affecting qualified plans that do not change the qualification requirements under section 401(a) (such as changes to the tax treatment of plan distributions, or changes to the funding requirements for qualified plans).

Part B includes changes in qualification requirements that the Treasury Department and the IRS anticipate will not require amendments in most plans, but might require an amendment because of an unusual plan provision in a particular plan. If a change affects a particular qualification requirement that most plans incorporate by reference, Part B would include the change because a particular plan might not incorporate the qualification requirement by reference and thus, might contain language inconsistent with the change. For example, if a defined benefit plan incorporates the limitation of section 436(d)(2) by reference to the statute or regulations (or through the use of the sample amendment in Notice 2011-96, 2011-52 I.R.B. 915), no amendment to the plan would be required to comply with the changes made by section 2003 of the Highway Transportation and Funding Act of 2014. P.L. 113-159.

Annual, monthly, or other periodic changes to (1) the various dollar limits that are adjusted for cost of living increases as provided in section 415(d), etc., (2) the spot segment rates used to determine the applicable interest rate under section 417(e)(3), and (3) the applicable mortality table under section 417(e)(3), are treated as included on the RA List for the year in which such changes are effective even though they are not directly referenced on such RA List. The Treasury Department and the IRS anticipate that few plans have language that will need to be amended on account of these changes.

The fact that a change in a qualification requirement is included on the RA List does not mean that a plan must be amended as a result of that change. Each plan sponsor must determine whether a particular change in a qualification requirement requires an amendment to its plan.

IV. 2016 REQUIRED AMENDMENTS LIST

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  Part A. Changes in qualification requirements that generally would require an amendment to most plans or to most plans of the type affected by the change.

• None

• Part B. Other changes in qualification requirements that may require an amendment.

• Collectively-bargained defined benefit plans: Restrictions on accelerated distributions from underfunded single-employer plans in employer bankruptcy under § 436. (Highway and Transportation Funding Act of 2014, P.L. 113-159, § 2003)

The principal author of this notice is Anne Bolling of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact Ms. Bolling at (202) 317-6799 (not a toll-free number).

² The remedial amendment period and plan amendment deadline for discretionary changes to the terms of a plan are governed by sections 5.05(2), 5.06(2), and 8.02 of Rev. Proc. 2016-37, and are not affected by the inclusion of a change in qualification requirements on an RA List.