IRS Releases 2012 Cumulative List of Changes in Plan Qualification Requirements

Practical Law Legal Update 1-523-0378 (Approx. 5 pages)

IRS Releases 2012 Cumulative List of Changes in Plan Qualification Requirements

by PLC Employee Benefits & Executive Compensation

IRS Notice 2012-76

The IRS recently issued Notice 2012-76, which provides the 2012 Cumulative List of Changes in Plan Qualification Requirements (Cumulative List). The Cumulative List contains a compilation of changes to employee benefit plan requirements that are embodied in statutes and IRS guidance. The IRS publishes a Cumulative List annually according to Section 4 of IRS Revenue Procedure 2007-44. The 2012 Cumulative List contains the plan qualification requirements from the 2007, 2008, 2009, 2010 and 2011 Cumulative Lists, as well as new requirements made in 2012 (the changes that were not in previous Cumulative Lists are labeled as "New" in the 2012 Cumulative List).

Employee benefit plan sponsors, administrators and attorneys should rely on the Cumulative List when they submit determination letter applications to the IRS during Cycle C, the submission period that begins February 1, 2013 and ends January 31, 2014 (see Practice Note, Applying for an IRS Determination Letter). The IRS will also start accepting opinion and advisory letter applications for defined benefit pre-approved plans starting February 1, 2013.

The changes contained in the Cumulative List are specifically identified for review by the IRS regarding whether a plan filing in Cycle C has been properly updated. The IRS will not consider in its review of determination letter applications:

The 2010 final hybrid plan regulations (other than provisions related to IRC Section 411(a)(13)(A) and provisions of the regulations effective for plan years beginning on or after January 1, 2011), unless the plan has already been amended to satisfy those regulations.
Qualification requirements first effective in 2014 or later.
Statutory provisions that are first effective in 2013 that are not identified in the Notice.
Guidance issued and statutes enacted after October 1, 2012, except:
- final regulations under IRC Section 411(d)(6) which permit a plan sponsor that is a debtor in a bankruptcy proceeding to amend its single-employer defined benefit plan to eliminate a single-sum distribution option; or
- IRS Notice 2012-70, which extends the deadline to amend a defined benefit plan to meet the requirements of IRC Section 436.

The Cumulative List applies mainly to:

Single employer individually designed defined contribution plans that are in Cycle C.
Single employer individually designed defined benefit plans that are in Cycle C.
Section 414(d) governmental plans that choose to file during Cycle C.
Defined benefit pre-approved plans (either master and prototype or volume submitter plans) for the second submission under the remedial amendment cycle discussed in IRS Revenue Procedure 2007-44.

The changes in the Cumulative List do not extend the deadline by which a plan must be amended to comply with statutory, regulatory or guidance changes. For a plan to be qualified, it must comply with all qualification requirements, not just those in the Cumulative List.

The 2012 Cumulative List includes relevant legal changes as set out in:

The Pension Protection Act of 2006.
The U.S. Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act.
The Heroes Earnings Assistance and Relief Tax Act of 2008.
The Worker, Retiree, and Employer Recovery Act of 2008.
The Small Business Jobs Act of 2010.
The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PPA 2010).
The Moving Ahead for Progress in the 21st Century (MAP-21) Act .

The 2012 Cumulative List provides changes in 36 different sections of the Internal Revenue Code (IRC). The new additions to the Cumulative List include recent changes to:

The transition relief provided for certain group trusts, retirement trusts and qualified retirement plans that qualify under the Puerto Rico Internal Revenue Code.
The normal retirement age regulations for governmental plans that do not provide for in-service distributions before age 62.
The conditions under which a direct rollover of an eligible rollover distribution from a defined benefit plan to a defined contribution plan maintained by the same employer satisfies the requirements of IRC Sections 411 and 415.
The effective date of certain provisions of the 2010 hybrid plan regulations (they will not be effective for plan years beginning before January 1, 2014).
The anti-cutback rules for a plan sponsor who is a debtor in a bankruptcy proceeding.
The application of the qualified joint and survivor annuity and the qualified preretirement survivor annuity rules to annuity contracts purchased under a profit sharing plan.
Changes to IRC Section 420 allowing transfers of excess pension assets to retiree health accounts and group term life insurance accounts.
The application of IRC Section 436 to single employer defined benefit plans.

Practical Implications

Employee benefit plan sponsors, administrators and attorneys should rely on the 2012 Cumulative List when they submit determination letter applications during Cycle C, the submission period that begins February 1, 2013 and ends January 31, 2014 (see Practice Note, Applying for an IRS Determination Letter: Timeframe for Filing for an IRS Determination Letter). However, the Cumulative List does not extend the deadline by which a plan must be amended to comply with statutory, regulatory or guidance changes. Guidance issued or statutes enacted after October 1, 2012 will not be reviewed by the IRS in determination letter applications. For a collection of resources relating to filing IRS determination letters, see Retirement Plan Determination Letters Toolkit.

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