IRS Extends Remedial Amendment Periods

The IRS has extended the remedial amendment period for 403(b) plans and pre-approved defined benefit plans. The IRS made the announcement on March 27.

The American Retirement Association (ARA) in a March 16 letter to Cathy Jones, Director of the IRS Office of Employee Plans, commented on the 403(b) plan remedial amendment period and the need for correction methods for plan sponsors that will find document failures in the future. The ARA pressed the IRS to extend the remedial amendment period for 403(b) plans.
 

403(b) Plans 

The IRS is extending the last day of the initial remedial amendment period for Section 403(b) plans from March 31, 2020, to June 30, 2020. Plan sponsors now have until June 30, 2020, to update their pre-approved and individually designed 403(b) plan documents.

Pre-Approved Defined Benefit Plans

The IRS is extending these deadlines for the second six-year remedial amendment cycle from April 30, 2020 to July 31, 2020: 

 

1. The April 30, 2020 deadline for employers to adopt a pre-approved DB plan and to submit a determination letter application (if eligible) under the second six-year remedial amendment cycle.
2. The April 30, 2020, end of the second six-year remedial amendment cycle for pre-approved DB plans, as set forth in Announcement 2018-05.

The IRS also is delaying the beginning date for the third six-year remedial amendment cycle for pre-approved DB plans. It now will begin on August 1, 2020; however, its ending will remain the same—Jan. 31, 2025). 

The IRS is leaving the on-cycle submission period for pre-approved DB plan providers to submit opinion letter applications for the third six-year remedial amendment cycle unchanged. It will still begin on August 1, 2020, and end on July 31, 2021. 

Future Guidance 

The IRS intends to issue guidance to modify Revenue Procedure 2019-39, provides a system of recurring remedial amendment periods for correcting form defects for both individually designed and pre-approved 403(b) plans. It plans to amend that guidance to replace applicable references to March 31, 2020, with June 30, 2020. For example, the rules for the recurring remedial amendment periods for 403(b) individually designed plans now will apply to form defects first occurring after June 30, 2020, and the second cycle for 403(b) preapproved plans will begin on July 1, 2020.

The IRS also says that the extensions to the second six-year remedial amendment cycle, and the delayed beginning date for the third six-year remedial amendment cycle for pre-approved DB plans will be reflected in future guidance.