IRS extends amendment deadline for defined benefit plans

Milliman today issued this benefit alert:

The IRS has provided a much-welcomed extended deadline for you to amend your qualified defined benefit plans for provisions included in the Pension Protection Act (PPA) and other recent laws. In Notice 2010-77, the IRS has extended the deadline to the last day of the first plan year that begins on or after Jan. 1, 2011. For calendar-year plans, the new deadline is Dec. 31, 2011.

(Note, however, that the extended deadline does not apply to certain other amendments that plan sponsors must make by the end of this year, such as those under the “Heroes Earnings Assistance and Relief Tax Act” (HEART Act), relating to benefits for employees who are serving in the military. See Client Action Bulletin 10-25.)

The notice extends the deadline for the following:

  • amendments relating to funding-based limits on benefits and benefit accruals under single-employer plans (under sections 401(a)(29) and 436 of the Internal Revenue Code (IRC));
  • amendments relating to vesting and other special rules applicable to cash balance and other hybrid plans under IRC sections 411(a)(13)(C) and 411(b)(5); and
  • a plan’s eligibility under an interim plan amendment for the anticutback relief under IRC section 411(d)(6), as described in IRS Notice 2009-97.

Plans must continue to satisfy the operational compliance requirements as a condition of the extended deadline.

In addition, the notice states that the IRS will not take into account the requirements of IRC sections 401(a)(29) and 436 when the agency reviews determination letter applications submitted before Feb. 1, 2012. The IRS will consider the requirements of sections 411(a)(13) and 411(b)(5)–including those provisions in the Oct. 19, 2010, final rule–when reviewing determination letter requests filed after Jan. 31, 2011, under a standard of “reasonable interpretation” of the statute.

If you have any questions about the IRS’s extended amendment deadline, please contact your Milliman consultant.



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