Employee Benefits-IRS Extends Deadline For Adopting Certain Amendments For Pension Protection Act And WRERA Requirements

In Notice 2009-97 (the “Notice”), the IRS extends the deadline for amending qualified retirement plans to meet certain requirements of the Internal Revenue Code (the “Code”), which were added to the Code by the Pension Protection Act of 2006 (“PPA “), and which were subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (“WRERA”). Under the Notice, the deadline for amendment is extended to the last day of the first plan year that begins after 2009, and applies to:

–the deadline for amending single-employer defined benefit plans to meet the requirements of sections 401(a)(29) and 436 of the Code, relating to funding-based limits on benefits and benefit accruals;

–the deadline for amending cash balance and similar defined benefit plans to meet the requirements of section 411(a)(13) (other than section 411(a)(13)(A)) and section 411(b)(5) of the Code, relating to vesting and other special rules applicable to those plans; and
–the deadline for amending defined contribution plans to meet the requirements of section 401(a)(35) of the Code, relating to diversification requirements when the plan invests in employer securities.

Generally, prior to this Notice, the above amendments had to be adopted by the last day of the first plan year beginning after 2008.The Notice applies to both interim (required) or discretionary plan amendments, as defined in Revenue Procedure 2007-44, pertaining to the above Code sections. The employer must operate its plan in compliance with the requirements of the above Code sections on and after their effective date.

The Notice also provides limited relief from the anti-cutback requirements of section 411(d)(6) of the Code for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of sections 401(a)(29) and 436. Under this relief, an interim plan amendment, which eliminates or reduces a Code section 411(d)(6) protected benefit, will not cause a plan to fail to meet the anti-cutback requirements of section 411(d)(6), if the amendment is adopted by the last day of the first plan year beginning after 2009, and the elimination or reduction is made only to the extent necessary to enable the plan to meet the requirements of sections 401(a)(29) and 436. In addition, this Notice provides that limited section 411(d)(6) relief is expected to be granted for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of section 411(b)(5), once final regulations under sections 411(a)(13) and 411(b)(5) are issued.