The IRS on Dec. 5 issued Notice 2017-72, which contains the 2017 remedial amendment (RA) list for individually designed qualified retirement plans. The list identifies certain changes in qualification requirements that became effective in 2017 that may require a retirement plan to be amended in order to remain qualified, and establishes the date by which any necessary amendment must be made.
Section 5.05(3) of Revenue Procedure (Rev. Proc.) 2016-37 provides that for an individually designed plan, the remedial amendment period if a disqualification arises due to a change in qualification requirements generally is extended to the end of the second calendar year that begins after the RA list containing the change in qualification requirements is issued.
Accordingly, Notice 2017-72 provides that Dec. 31, 2019, generally is the last day of the remedial amendment period regarding a disqualification that arises due to a change in qualification requirements in this 2017 RA List. And Dec. 31, 2019, also is generally the deadline for making a plan amendment to address a disqualifying provision arising due to such changes. However, a later date may apply to a governmental plan (as defined in Internal Revenue Code Section 414(d)).
The 2017 RA List
Part A of the list contains changes in qualification requirements that generally would require an amendment to most plans or to most plans of the type the change affects.
Final regulations regarding cash balance/hybrid plans. Cash balance/hybrid plans must be amended to the extent necessary to comply with those portions of the regulations regarding market rate of return and other requirements that first become applicable to the plan for the plan year beginning in 2017.
Benefit restrictions for certain DB plans that are eligible cooperative plans or eligible charity plans under Section 104 of the Pension Protection Act of 2006. An eligible cooperative plan or eligible charity plan that was not subject to the benefit restrictions of Internal Revenue Code Section 436 for the 2016 plan year under Section 104 of PPA ordinarily becomes subject to those restrictions for plan years beginning on or after Jan. 1, 2017. However, a plan that fits within the definition of a CSEC plan continues not to be subject to those rules unless the plan sponsor has made an election for the plan not to be treated as a CSEC plan.
Part B of the list contains other changes in qualification requirements that may require an amendment.
Final regulations regarding partial annuity distribution options for DB plans. DB plans that permit benefits to be paid partly in the form of an annuity and partly as a single sum (or other accelerated form) must do so in a manner that complies with the regulations issued under Internal Revenue Code Section 417(e). Treas. Reg. §1.417(e)-1(d)(7) provides rules under which the minimum present value rules of Code Section 417(e)(3) apply to the distribution of only a portion of a participant’s accrued benefit.
Treas. Reg. §1.417(e)-1(d)(7) applies to distributions with annuity starting dates in plan years beginning on or after Jan. 1, 2017, but taxpayers may elect to apply Treas. Reg. §1.417(e)-1(d)(7) regarding any earlier period.
Note that Notice 2017-44 contains model amendments that a sponsor of a qualified DB plan may use to amend its plan to offer bifurcated benefit distribution options.
Notice 2017-72 will appear in Internal Revenue Bulletin 2017-5, which will be dated Dec. 26, 2017.
Section 5.05(3) of Revenue Procedure (Rev. Proc.) 2016-37 provides that for an individually designed plan, the remedial amendment period if a disqualification arises due to a change in qualification requirements generally is extended to the end of the second calendar year that begins after the RA list containing the change in qualification requirements is issued.
Accordingly, Notice 2017-72 provides that Dec. 31, 2019, generally is the last day of the remedial amendment period regarding a disqualification that arises due to a change in qualification requirements in this 2017 RA List. And Dec. 31, 2019, also is generally the deadline for making a plan amendment to address a disqualifying provision arising due to such changes. However, a later date may apply to a governmental plan (as defined in Internal Revenue Code Section 414(d)).
The 2017 RA List
Part A of the list contains changes in qualification requirements that generally would require an amendment to most plans or to most plans of the type the change affects.
Final regulations regarding cash balance/hybrid plans. Cash balance/hybrid plans must be amended to the extent necessary to comply with those portions of the regulations regarding market rate of return and other requirements that first become applicable to the plan for the plan year beginning in 2017.
Benefit restrictions for certain DB plans that are eligible cooperative plans or eligible charity plans under Section 104 of the Pension Protection Act of 2006. An eligible cooperative plan or eligible charity plan that was not subject to the benefit restrictions of Internal Revenue Code Section 436 for the 2016 plan year under Section 104 of PPA ordinarily becomes subject to those restrictions for plan years beginning on or after Jan. 1, 2017. However, a plan that fits within the definition of a CSEC plan continues not to be subject to those rules unless the plan sponsor has made an election for the plan not to be treated as a CSEC plan.
Part B of the list contains other changes in qualification requirements that may require an amendment.
Final regulations regarding partial annuity distribution options for DB plans. DB plans that permit benefits to be paid partly in the form of an annuity and partly as a single sum (or other accelerated form) must do so in a manner that complies with the regulations issued under Internal Revenue Code Section 417(e). Treas. Reg. §1.417(e)-1(d)(7) provides rules under which the minimum present value rules of Code Section 417(e)(3) apply to the distribution of only a portion of a participant’s accrued benefit.
Treas. Reg. §1.417(e)-1(d)(7) applies to distributions with annuity starting dates in plan years beginning on or after Jan. 1, 2017, but taxpayers may elect to apply Treas. Reg. §1.417(e)-1(d)(7) regarding any earlier period.
Note that Notice 2017-44 contains model amendments that a sponsor of a qualified DB plan may use to amend its plan to offer bifurcated benefit distribution options.
Notice 2017-72 will appear in Internal Revenue Bulletin 2017-5, which will be dated Dec. 26, 2017.
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