Notice 2009-97 by ProQuest


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									Extension of Deadline to                         ject to the minimum funding requirements            Section 401(a)(35), which was added
Adopt Certain Retirement                         of § 412 to meet the requirements of § 436.     by section 901(a)(1) of PPA ’06, requires
Plan Amendments                                  Section 436, which was added by section         certain defined contribution plans to meet
                                                 113(a)(1) of PPA ’06, imposes funding-          certain diversification requirements with
                                                 based limits on benefits and benefit ac-        respect to investments in employer secu-
Notice 2009–97
                                                 cruals under single-employer plans. The         rities. The requirements of § 401(a)(35)
I. Purpose                                       requirements of § 436 generally apply to        generally apply to plan years that begin af-
                                                 plan years that begin after December 31,        ter December 31, 2007. Notice 2006–107,
    This notice extends the deadline for         2007. Final regulations under § 436 were        2006–2 C.B. 1114, provides transitional
amending qualified retirement plans to           published in the Federal Register on Octo-      guidance regarding § 401(a)(35). Pro-
meet certain requirements of the Internal        ber 15, 2009, 74 F.R. 53004.                    posed regulations under § 401(a)(35)
Revenue Code that were added by the                  Section 411(a)(13), which was added         were published in the Federal Register on
Pension Protection Act of 2006 (PPA ’06),        by section 701(b)(2) of PPA ’06, contains       January 3, 2008, 73 F.R. 421. Final regu-
Pub. L. 109–280, and subsequently modi-          special rules for cash balance and other        lations under § 401(a)(35) are expected to
fied by the Worker, Retiree, and Employer        applicable defined benefit plans. Sec-          be published in the near future.
Recovery Act of 2008 (WRERA), Pub. L.            tion 411(a)(13)(A) provides, in general,            Section 401(b) provides a period during
110–458. The deadline is extended to the         that an applicable defined benefit plan         which a plan may be amended retroac-
last day of the first plan year that begins on   will not fail to satisfy the requirements of    tively to comply with the Code’s qualifi-
or after January 1, 2010. This extension         § 411(a)(2), 411(c), or 417(e) solely be-       cation requirements. Section 1.401(b)–1
applies to:                                      cause the present value of the participant’s    of the Treasury regulations and Rev.
    1. The deadline for amending single-         accrued benefit under the plan equals the       Proc. 2007–44, 2007–2 C.B. 54, describe
employer defined benefit plans to meet the       balance in the participant’s hypothetical       the disqualifying provisions that may be
requirements of §§ 401(a)(29) and 436,           account or the accumulated percentage of        amended retroactively and the remedial
relating to funding-based limits on bene-        the participant’s final average compensa-       amendment period during which retroac-
fits and benefit accruals under single-em-       tion. Section 411(a)(13)(B) requires an         tive amendments may be adopted. The
ployer plans;                                    applicable defined benefit plan to provide      regulations also grant the Commissioner
    2. The deadline for amending cash            100 percent vesting for employer-derived        the discretion to extend the remedial
balance and other applicable defined             benefits on completion of three years of        amendment period.
benefit plans, within the meaning of             service. Section 411(a)(13) is generally            Section 5.05 of Rev. Proc. 2007–44
§ 411(a)(13)(C), to meet the require-            effective for years that begin after Decem-     provides that when there are statutory or
ments of § 411(a)(13) (other than                ber 31, 2007, and for distributions made        regulatory changes to the plan qualifica-
§ 411(a)(13)(A)) and § 411(b)(5), relating       after August 17, 2006.                          tion requirements that will impact provi-
to vesting and other special rules applica-          Section 411(b)(5), which was added          sions of the written plan document, the
ble to these plans; and                          by section 701(b)(1) of PPA’06 and is           adoption of an interim amendment will
    3. The deadline for amending applica-        generally effective for years that begin        generally be required by the later of the end
ble defined contribution plans, within the       after December 31, 2007, contains spe-          of the plan year in which the change is first
meaning of § 401(a)(35)(E), to meet the re-      cial rules for applicable defined benefit       effective or the due date of the employer’s
quirements of § 401(a)(35), relating to di-      plans with regard to the requirements of        tax return for the tax year that includes the
versification requirements for certain de-       § 411(b)(1)(H), which prohibits a defined       date the change is first effective.
fined contribution plans.                        benefit plan from ceasing an employee’s             Section 411(d)(6) provides generally
    This notice also provides limited re-        benefit accruals or reducing an employee’s      that a plan will not satisfy § 401(a) if an
lief from the anti-cutback requirements          rate of benefit accrual because of the at-      amendment to the plan decreases a partic-
of § 411(d)(6) for amendments that are           tainment of any age.                            ipant’s accrued benefit. For this purpose,
adopted by the extended deadline for                 Notice 2007–6, 2007–1 C.B. 273,             a plan amendment which has the effect
amending a plan to meet the requirements         provides transitional guidance regarding        of eliminating or reducing an early retire-
of §§ 401(a)(29) and 436. In addition, this      the requirements of §§ 411(a)(13) and           ment benefit or a retirement-type subsidy
notice provides that limited § 411(d)(6)         411(b)(5). Proposed regulations under           or eliminating an optional form of bene-
relief is expected to be granted for amend-      §§ 411(a)(13) and 411(b)(5) were pub-           fit with respect to benefits attributable to
ments that are adopted by the extended           lished in the Federal Register on December      service before the amendment is treated as
deadline for amending a plan to meet the         28, 2007, 72 F.R. 73690. Announcement           reducing accrued benefits. Section 401(b)
requirements of § 411(b)(5) once final reg-      2009–82, 2009–48 I.R.B. 720, announced          does not relieve a plan of the requirement
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