IRS again extends deadline to amend DB plan to satisfy Code Sec. 436 rules

 

The IRS has issued a notice extending the deadline to amend a defined benefit plan to satisfy the requirements of Code Sec. 436 regarding limitations on the accrual and payment of benefits under certain underfunded, single-employer defined benefit plans. The notice also provides relief from the anti-cutback rules of Code Sec. 411(d)(6).

The IRS set forth the original deadline in Notice 2011-96. Notice 2011-96 provides a sample plan amendment that may be adopted to satisfy Code Sec. 436 and extended the deadline for adoption of an interim plan amendment.

The new guidance further extends the deadline to adopt an interim amendment for Code Sec. 436 to the latest of:

(1) the last day of the first plan year that begins on or after January 1, 2013,

(2) the last day of the plan year for which Code Sec. 436 is first effective for the plan, or

(3) the due date (including extensions) of the employer’s tax return for the tax year that contains the first day of the plan year for which Code Sec. 436 is first effective for the plan.

The extended deadline also applies in cases of a plan amendment with respect to Code Sec. 436 that eliminates or reduces a Code Sec. 411(d)(6) protected benefit. Thus, such an amendment would not cause the plan to fail to meet the anti-cutback requirements of Code Sec. 411(d)(6) if the amendment is adopted by the deadline described above and the elimination or reduction is made only to the extent necessary to enable the plan to meet the requirements of Code Sec. 436.

Source: IRS Notice 2012-70.

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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