Meet the New Year-End List
With the end of the IRS 5-year cycle determination letter program for individually-designed qualified retirement plans comes the new Required Amendments List, recently announced in IRS Notice 2016-80. Starting with 2016, the IRS will issue a Required Amendments List for plan qualification changes that are first effective in that year. Any required changes must be made by the end of the second calendar year that begins after the issuance of the Required Amendments List (the "remedial amendment period"). There may be a longer remedial amendment period for governmental plans.
For example, the Required Amendments List for 2016 provides that required changes first effective in 2016 must be made to plans by December 31, 2018.
The Required Amendments List will identify changes under two categories:
(1) changes that generally would require a plan amendment, and
(2) changes that may require a plan amendment.
The second category are those changes that the IRS believes will require an amendment if the plan language is unusual or inconsistent with the change. For example, if a qualification requirement is not incorporated by reference and a change is made to that qualification requirement, the change falls in the second category as only plans that did not incorporate the requirement by reference may have used language inconsistent with the change.
The good news for the Required Amendments List for 2016 is that there are no changes that would require an amendment and only one that may require an amendment and that one only for collectively bargained defined benefit plans (dealing with Internal Revenue Code Section 436 compliance with accelerated distributions from underfunded single employer plans in employer bankruptcy).
Along with Santa checking his list, plan sponsors of individually-designed 401(k), profit sharing and defined benefit plans need to begin annually to check the Required Amendments List and schedule any amendments to be adopted within the remedial amendment period.
Nelson Mullins Executive Compensation and Employee Benefits attorneys are ready to assist with your compensation and benefits related matters in a cost-effective and responsive manner. Please contact one of our Executive Compensation and Employee Benefits partners or the Nelson Mullins attorney with whom you work.
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.