IRS Releases 2015 Cumulative List of Changes in Plan Qualification Requirements

Practical Law Legal Update w-001-0761 (Approx. 6 pages)

IRS Releases 2015 Cumulative List of Changes in Plan Qualification Requirements

by Practical Law Employee Benefits & Executive Compensation

IRS Notice 2015-84

On December 14, 2015, the IRS issued Notice 2015-84, which provides the 2015 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 2015 Cumulative List contains the plan qualification requirements from the 2011, 2012, 2013 and 2014 Cumulative Lists, as well as new requirements made in 2015, which are discussed below (the changes that were not in previous Cumulative Lists are labeled as "New" in the 2015 Cumulative List).

Employee benefit plan sponsors, administrators and attorneys should rely on the 2015 Cumulative List when they submit determination letter applications to the IRS during Cycle A, the submission period that begins February 1, 2016 and ends January 31, 2017 (see Practice Note, Applying for an IRS Determination Letter).

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

Guidance issued and statutes enacted after October 1, 2015.
Qualification requirements first effective in 2017 or later.
Statutory provisions that are first effective in 2016 that are not identified in the Notice.
Proposed regulations or other guidance described solely in any footnote in the Notice.

The 2015 Cumulative List applies mainly to:

Single employer individually designed defined contribution plans that are in Cycle A.
Single employer individually designed defined benefit plans that are in Cycle A.

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 2015 Cumulative List includes relevant legal changes as set out in:

The Pension Protection Act of 2006.
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 American Taxpayer Relief Act of 2012.
The Highway and Transportation Funding Act of 2014 (HATFA).
The Cooperative and Small Employer Charity (CSEC) Pension Flexibility Act.
The Consolidated and Further Continuing Appropriations Act of 2015.
The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.

The 2015 Cumulative List categorizes these changes under 23 different sections of the Internal Revenue Code (Code). The new additions to the Cumulative List include the recent changes required by:

IRS Notice 2015-28, which extends for an additional year the temporary nondiscrimination relief previously established in IRS Notice 2014-5 for closed defined benefit pension plans that have been aggregated with a defined contribution plan (see Legal Update, IRS Extends Temporary Nondiscrimination Relief for Closed Defined Benefit Plans).
IRS Notice 2015-49, which informs taxpayers that the Treasury Department and the IRS intend to amend regulations under Code Section 401(a)(9) (26 U.S.C. § 401(a)(9)) to generally prohibit defined benefit pension plans from replacing annuities with lump sum payments for participants in pay status. These amendments are intended to apply as of July 9, 2015 except for certain accelerations of annuity payments described in the Notice (see Legal Update, IRS Notice 2015-49 Prohibits Plans from Offering Lump Sum Risk Transferring Programs for Participants in Pay Status).
Division P of the Consolidated and Further Continuing Appropriations Act, which adds Code Section 411(f) (26 U.S.C. § 411(f)) to provide a special rule for determining the normal retirement age for certain existing defined benefit plans (for more information on the Consolidated and Further Continuing Appropriations Act generally, see Legal Update, President Signs Bill Reforming Multiemployer Pension Plan Rules).
Section 2007 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which amends Code Section 420 (26 U.S.C. § 420) to extend the provisions relating to transfers to December 31, 2025 (for more information on the Surface Transportation and Veterans Health Care Choice Improvement Act generally, see Legal Update, Recent Legislation Impacts COBRA, HSAs, Expatriate Plans, ACA Reporting Penalties and the Employer Mandate).
Code Section 432(e)(9) (26 U.S.C. § 432(e)(9)), as amended by the Multiemployer Pension Reform Act of 2014 (MPRA), which is contained in Division O of the Consolidated and Further Continuing Appropriations Act, permits sponsors of multiemployer pension plans to suspend benefits if certain conditions are satisfied (for more information, see Legal Update, President Signs Bill Reforming Multiemployer Pension Plan Rules).
Temporary regulations that provide guidance to assist sponsors of multiemployer pension plans that wish to apply for approval of a suspension of benefits to prepare and submit an application (80 Fed. Reg. 35207) (see Practice Note, Multiemployer Pension Plans: Suspension of Benefits to Prevent Insolvency). In a footnote, the Cumulative List mentions the temporary regulations providing guidance on the administration of the final vote of participants to approve a suspension of benefits (80 Fed. Reg. 52972).

Practical Implications

Employee benefit plan sponsors, administrators and attorneys should rely on the 2015 Cumulative List when they submit determination letter applications during Cycle A, the submission period that begins February 1, 2016 and ends January 31, 2017 (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, 2015 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.

It should also be noted that Cycle A is the last cycle for determination letter applications that the IRS is accepting. Under IRS Announcement 2015-19, the IRS is:

Eliminating the staggered five-year remedial amendment cycles for individually designed plans.
No longer accepting determination letter applications based on the five-year remedial amendment cycles.

For more information on IRS Announcement 2015-19, see Legal Update, IRS Announcement 2015-19 Changes Determination Letter Program for Individual Designed Plans and Expert Q&A on the Impact of Downsizing the IRS Determination Letter Program.

IRS Releases 2015 Cumulative List of Changes in Plan Qualification Requirements | Practical Law