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Required 2012 Qualified Retirement Plan Amendments
Practical Law Legal Update 3-522-2457 (Approx. 4 pages)
Required 2012 Qualified Retirement Plan Amendments
by PLC Employee Benefits & Executive Compensation
| Published on 06 Nov 2012 • USA (National/Federal) |
An overview of the required qualified retirement plan amendments for individually designed plans that must be adopted to comply with the Internal Revenue Code (IRC) by the end of the 2012 plan year.
Defined Contribution Plan Amendments
Plan sponsors of defined contribution plans that hold employer securities (including employee stock ownership plans (ESOPs)) may need to adopt amendments reflecting guidance in IRS Notice 2011-19 that sets out when securities are considered "readily tradable on an established securities market."
Defined Benefit Plan Amendments
Plan sponsors of single-employer defined benefit plans may need to adopt amendments relating to funding-based limits on accelerated benefit payments and benefit accruals under IRC Sections 401(a)(29) and 436. IRS Notice 2011-96 extended the amendment deadline to the later of:
- The last day of the first plan year that begins on or after January 1, 2012.
- The last day of the plan year for which IRC Section 436 is first effective for the plan.
- The due date (including extensions) of the employer's tax return for the tax year that contains the first day of the plan year for which IRC Section 436 is first effective for the plan.
Cash Balance and Hybrid Plans
Plan sponsors of cash balance and hybrid plans should be aware that the IRS, in Notice 2011-85, extended the deadline for adopting interim and discretionary amendments relating to the IRC Section 411(b)(5) interest crediting and market rate of return rules and most of the Section 411(a)(13) requirements. This deadline is extended until the last day of the plan year before the plan year in which the proposed hybrid plan regulations, when finalized, are effective for the plan. For more information on this extension, see Legal Update, IRS Postpones Effective Date of Interest Crediting Rules for Cash Balance and Hybrid Plans.
Governmental Plans
Sponsors of governmental plans have until December 31, 2012, to adopt amendments to comply with the:
- Heroes Earnings Assistance Relief Act of 2008.
- Worker, Retiree, and Employer Recovery Act of 2008 relating to the elimination of required minimum distributions for the 2009 plan year.
Puerto Rico Plans
Plan sponsors of qualified retirement plans covering employees who are bona fide residents of Puerto Rico or who perform labor or services primarily within Puerto Rico, regardless of residence for other purposes, are required to amend their plans on or before the end of the first plan year beginning on or after January 1, 2012, to comply with provisions of the Puerto Rico Internal Revenue Code. Plans that are intended to be qualified both in the US and Puerto Rico (dual-qualified plans) must also be amended to comply with changes applicable to defined contribution plans and defined benefit plans (see Defined Contribution Plan Amendments and Defined Benefit Plan Amendments).
For more information on all of the required year-end amendments, see Article, Required 2012 Qualified Retirement Plan Amendments and Cycle B Determination Letter Filing Deadline.