By Pension and Benefits Editorial Staff
The IRS has released the 2020 Required Amendments List for individually designed qualified retirement plans and 403(b) plans. The list identifies certain changes in qualification requirements that became effective in 2020 that may require a retirement plan to be amended in order to remain qualified.
In Rev. Proc. 2016-37, the IRS provides that, for disqualifying provisions that arise as a result of a change in qualification requirements, the IRS will publish annually a Required Amendments (RA) List, which will establish the deadline for a plan to be amended. The deadline for amendments will be, unless otherwise provided, the end of the second calendar year following the year in which the list is issued. Similarly, Rev. Proc. 2019-39 provides that, with respect to a form defect in a 403(b) individually designed plan, the remedial amendment period arising as a result of a change in 403(b) requirements ends on the last day of the second calendar year that begins after the issuance of the RA List on which the change in 403(b) requirements appears.
Remedial amendment period/plan amendment deadline. December 31, 2022 generally 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 the 2020 RA List and to a form defect arising as a result of a change in 403(b) requirements that appears on the 2020 RA List. In addition, December 31, 2022 is generally the plan amendment deadline for a disqualifying provision arising as a result of a change in qualification requirements that appears on the 2020 RA List as well as for a form defect arising as a result of a change in 403(b) requirements that appears on the 2020 RA List. However, a later date may apply to a governmental plan (as defined in Code Sec. 414(d)).
Organization of RA List. The RA List is divided into two parts: Part A and Part B. Part A covers changes in qualification requirements that generally would require an amendment to most plans or to most plans of the type affected by the change. There are no changes under Part A.
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. There are two changes listed in Part B.
Difficulty of care payments treated as compensation for retirement contribution limitations. Plans that are maintained by employers that have provided difficulty of care payments during plan years beginning after December 31, 2015, and before January 1, 2021, must be amended by December 31, 2022 or, if later, the date applicable to the plan under Act Sec. 601 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (P.L. 116-94), as set forth in section G of IRS Notice 2020-68. If an employer changes its practice and begins to make difficulty of care payments to its employees in future years, the plan must be amended to include difficulty of care payments in the definition of Code Sec. 415(c)(1) compensation by the end of the second calendar year following the calendar year in which the employer begins to make difficulty of care payments.
Application of CSEC plan rules to certain charitable employers. Act Sec. 3609 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136), provides that the definition of a cooperative and small employer charity pension plan (CSEC plan) includes a defined benefit plan that, as of January 1, 2000, was maintained by a tax-exempt employer that met specific characteristics. A CSEC plan is not permitted to include the benefit restrictions of Code Sec. 436.
The IRS notes that 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.
Source: IRS Notice 2020-83.
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