IRS issues 2012 cumulative list of changes in plan qualification requirements

The IRS has issued its 2012 Cumulative List of Changes in Plan Qualification Requirements. The 2012 Cumulative List is to be used by plan sponsors and practitioners submitting determination letter applications for plans during the period beginning February 1, 2013 and ending January 31, 2014. These plans will primarily be single-employer individually designed defined contribution plans and single-employer individually designed defined benefit plans that are in Cycle C, and governmental plans (including governmental multiemployer or governmental multiple-employer plans) that choose to file during Cycle C. Generally an individually designed plan is in Cycle C if the last digit of the employer identification number of the plan sponsor is 3 or 8. In addition, the 2012 Cumulative List will be used by sponsors of defined benefit pre-approved plans (that is, defined benefit plans that are master and prototype (M&P) or volume submitter (VS) plans) for the second submission under the remedial amendment cycle described in Rev. Proc. 2007-44.

The 2012 Cumulative List informs plan sponsors of issues the IRS has specifically identified for review in determining whether a plan filing in Cycle C has been properly updated. The 2012 Cumulative List reflects law changes under the Pension Protection Act of 2006 (PPA; P.L. 109-280), the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act (P.L. 110-28), the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008 (P.L. 110-245), the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA; P.L. 110-458), the Small Business Jobs Act of 2010 (P.L. 111-240), the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (P.L. 111-192), and the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141).

Generally, the IRS will not consider in its review of any determination letter application for the submission period that begins February 1, 2013, any:

(1) guidance issued after October 1, 2012;

(2) statutes enacted after October 1, 2012;

(3) qualification requirements first effective in 2014 or later; or

(4) statutory provisions that are first effective in 2013, for which there is no guidance identified in this notice.

However, in order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2012 Cumulative List. Terminating plans must include all law changes in effect at the time of termination.

2012 changes highlighted

The 2012 Cumulative List contains those plan qualification requirements listed in the 2007 Cumulative List that are applicable to defined benefit pre-approved plans, the plan qualification requirements in the 2008, 2009, 2010, and 2011 Cumulative Lists, as well as additional 2012 plan qualification requirements. Some of the newly added qualification requirements for 2012 include:

• Notice 2012-6, dealing with transition rules for certain Puerto Rico retirement trusts;

• Notice 2012-29, dealing with guidance relating to the application of normal retirement age rules to governmental plans;

• Rev. Rul. 2012-4, guidance for annuitizing a distribution rolled over from a DC plan to the DB plan of the same employer;

• Notice 2012-61, guidance on MAP-21 funding rules for single-employer plans;

• Final regulations under Code Sec. 411(d)(6), which provide an additional limited exception to the anti-cutback rules to a plan sponsor who is a debtor in a bankruptcy proceeding;

• Rev. Rul. 2012-3, describing how the QJSA and QPSA rules apply to 401(k) plan participants’ investments in deferred annuity contracts;

• MAP-21, sections 40241 and 40242, dealing with transfers of excess pension assets to retiree health accounts;

• IRS Reg. §1.436-1 providing guidance on the funding rules for single-employer defined benefit plans;

• Notice 2011-3, guidance on the special funding rules under the Pension Relief Act of 2010;

• Notice 2011-96, which provides a sample plan amendment to satisfy Code Sec. 436; and

• Notice 2012-70, extending the deadline to amend a plan to satisfy Code Sec. 436.

Source: IRS Notice 2012-76.

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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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