The Internal Revenue Service (the “Service”) recently released Notice 2013-84, which contains the 2013 Cumulative List of Changes in Plan Qualification Requirements (the “2013 Cumulative List”) described in Section 4 of Revenue Procedure 2007-44. The 2013 Cumulative List is to be used by plan sponsors and practitioners submitting determination letter applications for plans during the period beginning February 1, 2014 and ending January 31, 2015.
The 2013 Cumulative List applies primarily to the plan sponsors of individually-designed defined contribution plans (including ESOPs) and single employer individually-designed defined benefit plans that are in Cycle D, and multiemployer plans as described in Internal Revenue Code (“Code”) section 414(f). Generally, an individually-designed plan is in Cycle D if the last digit of the plan sponsor’s employer identification number (“EIN”) ends in either 4 or 9.
The 2013 Cumulative List informs plan sponsors of areas the Service has specifically identified for review in determining whether a plan filing in Cycle D has been properly updated. The 2013 Cumulative List specifically addresses law changes under the Pension Protection Act of 2006 (PPA ’06); the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act, 2007; the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act); the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA); the Small Business Jobs Act of 2010 (SBJA); the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010); the Moving Ahead for Progress in the 21st Century Act (MAP-21); and the American Taxpayer Relief Act of 2012 (ATRA).
In this review cycle, the Service said that it will not consider any of the following:
- Guidance published after October 1, 2013, except for:
- final regulations under Code sections 401(k) and 401(m), which provide guidance on permitted mid-year reductions or suspensions of safe harbor nonelective contributions in certain circumstances for amendments adopted after May 18, 2009, and revise the requirements for permitted mid-year reductions or suspensions of safe harbor matching contributions for plan years beginning on or after January 1, 2015; and
- Notice 2013-74, which provides guidance under new Code section 402A(c)(4)(E), as added by Section 902 of ATRA, relating to the rollovers of otherwise nondistributable amounts from Section 401(k) plans, Section 403(b) plans, and Section 457(b) plans to designated Roth accounts in the same plan (“in-plan Roth rollovers”). This notice also provides guidance that applies to all in-plan Roth rollovers under Code section 402A(c)(4).
- Statutes enacted after October 1, 2013
- Qualification requirements first effective in 2015 or later
- Statutory provisions that are first effective in 2014 for which there is no guidance identified in the 2013 Cumulative List
- The 2010 final hybrid plan regulations (other than Code section 411(a)(13)(A), with respect to the special rules for plans computing accrued benefits by reference to hypothetical account balances or equivalent amounts), unless the plan has been amended to satisfy those regulations and then only with respect to those provisions of the regulations that are in effect for plan years beginning on or after January 1, 2011
Terminating plans must include all law changes in effect at the time of termination.
The 2013 Cumulative List includes those plan qualification requirements included in the 2009, 2010, 2011 and 2012 cumulative lists, as well as additional 2013 plan qualification requirements. Items which initially appeared on the cumulative lists in prior years (i.e., 2004 through 2008) have been deleted. The utility of the cumulative list was enhanced by removing items that would have been previously reviewed in the case of a plan that was submitted during the initial Cycle D submission period (February 1, 2009 – January 31, 2010). In the case of a plan that has not been previously reviewed for items on earlier cumulative lists, the items from the earlier cumulative lists must be taken into account (such as in the case of a new plan that was established after the initial Cycle D submission period).
The 2013 Cumulative List includes the following “new” plan qualification requirements listed by section of the Code.
- In United States v. Windsor, 570 U.S., 133 S. Ct. 2675 (2013), the Supreme Court found that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional because it violates the principles of equal protection. Section 3 of DOMA provided that in determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word `marriage’ means only a legal union between one man and one woman as husband and wife, and the word `spouse’ refers only to a person of the opposite sex who is a husband or a wife.
- In Revenue Ruling 2013-17, the IRS:
- States that for Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex
- Adopts a general rule for Federal tax purposes recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages
- Notice 2013-17 provides relief from anti-cutback rules for an amendment to an ESOP that eliminates all in-service distribution options previously used to satisfy the diversification requirements of Code section 401(a)(28)(B)(i).
401(k) & 401(m)
- Final regulations published on November 15, 2013:
- Provide guidance on permitted mid-year reductions or suspensions of safe harbor nonelective contributions in certain circumstances for amendments adopted after May 18, 2009
- Revise the requirements for permitted mid-year reductions or suspensions of safe harbor matching contributions for plan years beginning on or after January 1, 2015
- Notice 2013-74 provides:
- Guidance under new Code section 402A(c)(4)(E) relating to the expansion of rollovers from Section 401(k) plans, Section 403(b) plans, and Section 457(b) plans to designated Roth accounts in the same plan (“in-plan Roth rollovers”) to include rollovers of otherwise nondistributable amounts
- Additional guidance that applies to all in-plan Roth rollovers under Code section 402A(c)(4)
- Notice 2013-17 provides relief from anti-cutback rules for an amendment to an ESOP to eliminate all in-service distribution options previously used to satisfy the diversification requirements of Code section 401(a)(28)(B)(i).
- In Notice 2013-11 guidance is provided on the 25-year average segment rates that are applied to adjust the otherwise applicable 24-month average segment rates used to compute the minimum contribution requirements for single-employer defined benefit plans under Code section 430 of the Code and Section 303 of the Employee Retirement Income Security Act of 1974 (ERISA), to reflect the adjustment required by the new Code section 430(h)(2)(C)(iv) (as added by MAP-21), for plan years beginning in 2013.
If you have any questions regarding these provisions or your need to update your plan(s), please contact the Trucker Huss attorney with whom you regularly work.