Pension & Benefits News IRS issues 2020 cumulative list of changes for third six-year remedial amendment cycle
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Monday, March 30, 2020

IRS issues 2020 cumulative list of changes for third six-year remedial amendment cycle

By Pension and Benefits Editorial Staff

The IRS has issued its 2020 Cumulative List of changes in plan qualification requirements for pre-approved defined benefit plans. Cumulative Lists identify changes in the qualification requirements of the Code that must be taken into account in a pre-approved plan document submitted to the IRS under the IRS’s pre-approved plan program and that will be considered by the IRS for purpose of issuing opinion letters.

Submission period for third remedial amendment cycle. The 2020 List is to be used by pre-approved plan providers to submit opinion letter applications for pre-approved defined benefit plans during the third six-year remedial amendment cycle, which begins May 1, 2020 and ends January 31, 2025. Defined benefit plans may be submitted for approval during the on-cycle submission period, which begins August 1, 2020 and ends July 31, 2021. The 2020 List does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory, or guidance changes.

Cut-offs for Cumulative List. The IRS will not consider any of the following items in its review of any opinion letter application submitted under the third remedial amendment cycle:

  • guidance issued after December 1, 2019;
  • statutes enacted after December 1, 2019;
  • qualification requirements first effective in 2021 or later; and
  • statutory provisions that are first effective in 2020 for which there is no guidance.

However, in order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2020 Cumulative List.

SECURE Act changes. The IRS will not review any defined benefit plan document submitted under the third remedial amendment cycle for any changes in the qualification requirements made by Division O, the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted as part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94), and pre-approved plan providers should not include SECURE Act provisions in plan documents submitted with their opinion letter applications under the third remedial amendment cycle for pre-approved defined benefit plans. However, pre-approved plan providers will need to timely adopt interim or discretionary amendments. Generally, the deadline for adopting any plan amendment made pursuant to the SECURE Act is the last day of the first plan year beginning on or after January 1, 2022. This deadline will apply with respect to these interim or discretionary amendments rather than the general deadlines for timely adoption of interim or discretionary amendments (set forth in Sec. 15 of Rev. Proc. 2016-37.

2020 changes highlighted. The 2020 Cumulative List contains changes in the plan qualification requirements that were issued, enacted, or effective after October 1, 2012 that relate to pre-approved defined benefit plans. The IRS notes that if a plan has not been previously reviewed for items on earlier cumulative lists or for qualification requirements that applied prior to those earlier cumulative lists that relate to pre-approved defined benefit plans, those items and qualification requirements will also be taken into account. Some of the newly added qualification requirements for 2020 includes:

  • Rev. Rul. 2013-17, providing guidance on the terms “spouse,” “husband and wife,” “husband,” and “wife” following the Supreme Court ruling in United States v. Windsor.
  • Notice 2014-19, applying the decision in United States v. Windsor to qualified retirement plans.
  • Notice 2015-86, providing guidance for qualified retirement plans as a result of the Supreme Court decision in Obergefell v. Hodges.
  • IRS Reg. §1.401(k)-1(d)(3)(iv)(E), pursuant to the Bipartisan Budget Act of 2018 (P.L. 115-123),, deleting the six-month prohibition on employee contributions to all plans maintained by the employer (including defined benefit plans) after a hardship distribution.
  • Code Sec. 408(p)(1)(B), as amended by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) (P.L. 114-113), permitting rollovers from a qualified plan to a SIMPLE IRA.
  • Code Sec. 436(d)(2), as amended by the Highway and Transportation Funding Act of 2014 (HATFA) (P.L. 113-159), providing that limitations on interest rates based on corresponding 25-year average segment rates do not apply for purposes of accelerated benefit distributions for a plan sponsored by an employer in bankruptcy.

Source:  IRS Notice 2020-14.

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