IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403(b)s

The IRS on Nov. 20 issued the 2020 list of required amendments (RA) for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83. 

Under Section 5 of Revenue Procedure (Rev. Proc.) 2016-37, in the case of a qualified individually designed plan, the RA period for a disqualifying provision arising as a result of a change in qualification requirements is extended to the end of the second calendar year that begins after the issuance of the RA List on which the change in qualification requirements appears. 

Similarly, Section 5 of Rev. Proc. 2019-39 provides that regarding a form defect in a 403(b) individually designed plan, the RA period arising as a result of a change in 403(b) requirements ends on the last day of the second calendar year that begins after the issuance of the RA List on which the change in 403(b) requirements appears. 

In accordance with these sections, Dec. 31, 2022, generally is the last day of the RA period regarding: 

• a disqualifying provision arising as a result of a change in qualification requirements that appears on the 2020 RA List, and 
• a form defect arising as a result of a change in 403(b) requirements that appears on the 2020 RA List. 
• In addition, under Section 8.01 of Rev. Proc. 2016-37 and Section 6.01 of Rev. Proc. 2019-39, Dec. 31, 2022 generally also is the plan amendment deadline for:
• a disqualifying provision arising as a result of a change in qualification requirements that appears on the 2020 RA List, and 
• a form defect arising as a result of a change in § 403(b) requirements that appears on the 2020 RA List. 

Later dates may apply to a governmental plan under Sections 5.06(3) and 8.01 of Rev. Proc. 2016-37 and Sections 5.03(2)(c) and 6.01 of Rev. Proc. 2019-39. 

RA Lists

In general, an RA List includes statutory and administrative changes in requirements that are first effective during the plan year in which the list is published. However, an RA List does not include guidance issued or legislation enacted after the list has been prepared and also does not include: 

• statutory changes in requirements for which the Treasury Department and the IRS expect to issue guidance (which would be included on an RA List issued in a future year); 
• changes in requirements that permit, but do not require, optional plan provisions, in contrast to changes in requirements that cause existing plan provisions to become disqualifying provisions or § 403(b) form defects; or 
• changes in the tax laws affecting qualified individually designed plans or 403(b) individually designed plans that do not change the requirements under Code Sections 401(a) or 403(b). 

The RA List is divided into two parts. Part A covers changes in requirements that generally would require an amendment to most plans or to most plans of the type affected by the change. Part B includes changes in requirements that the Treasury Department and the IRS anticipate will not require amendments to most plans, but might require an amendment because of an unusual plan provision in a particular plan.

2020 RA List 

Part A. There are no changes in requirements that generally would require an amendment to most plans or to most plans of the type affected by the change. 

Part B. Changes in requirements that may require an amendment include:

• Difficulty of care payments treated as compensation for retirement contribution limitations. Section 116(b) of the SECURE Act adds Section 415(c)(8) to the Internal Revenue Code to increase the annual additions limit for retirement plans to take into account difficulty of care payments, which are defined in Section 131(c). Section 415(c)(8)(A) provides that a participant’s compensation for purposes of Code Section 415(c)(1) is increased by the amount of difficulty of care payments. Plans that are maintained by employers that have provided difficulty of care payments during plan years beginning after Dec. 31, 2015, and before Jan. 1, 2021, must be amended by Dec. 31, 2022 or, if later, the SECURE Act Section 601 date applicable to the plan. If an employer changes its practice and begins to make difficulty of care payments to its employees in future years, the plan must be amended to include difficulty of care payments in the definition of Section 415(c)(1) compensation by the end of the second calendar year following the calendar year in which the employer begins to make difficulty of care payments. 
• Application of cooperative and small employer charity pension plan rules to certain charitable employers. Section 3609 of the CARES Act adds Section 414(y)(1)(D) to the Internal Revenue Code. Section 414(y)(1)(D) provides that a cooperative and small employer charity pension plan (CSEC plan) includes a defined benefit plan that, as of Jan. 1, 2000, was maintained by a tax-exempt employer that met specific characteristics. A CSEC plan may not include the benefit restrictions of Internal Revenue Code Section 436.