The IRS on Nov. 30 issued the 2021 list of required amendments (RA) for individually designed plans qualified under Code Sections 401(a) and 403(b). The list is contained in Notice 2021-64.
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, 2023, 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 2021 RA List, and
- a form defect arising as a result of a change in 403(b) requirements that appears on the 2021 RA List.
In addition, under Section 8.01 of Rev. Proc. 2016-37 and Section 6.01 of Rev. Proc. 2019-39, Dec. 31, 2023 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 2021 RA List, and
- a form defect arising as a result of a change in Internal Revenue Code Section 403(b) requirements that appears on the 2021 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 covers 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.
2021 RA List
Part A. Changes in requirements that generally would require an amendment to most plans or to most plans of the type affected by the change include the following.
Special Financial Assistance Program for financially troubled multiemployer plans. Section 9704 of the American Rescue Plan Act of 2021 added Section 4262 to ERISA and Section 432(k) to the Internal Revenue Code.
Under Section 4262 of ERISA, the sponsor of an eligible multiemployer plan as defined in Section 4262(b) of that law may apply to the Pension Benefit Guaranty Corporation (PBGC) to receive special financial assistance, provided certain conditions are satisfied.
Code Section 432(k) provides rules relating to an eligible multiemployer plan that applies to PBGC for special financial assistance. Section 432(k)(2)(A)(i) provides that an eligible multiemployer plan receiving special financial assistance under Section 4262 of ERISA must reinstate any benefits that were suspended under Code Section 432(e)(9) or Section 4245(a) of ERISA (which corresponds to Code Section 418E(a)), effective as of the first month in which the effective date for the special financial assistance occurs, for participants and beneficiaries as of such month.
Code Section 432(k)(2)(A)(ii) provides that an eligible multiemployer plan must also provide payments equal to the amount of benefits previously suspended to any participants or beneficiaries in pay status as of the effective date of the special financial assistance, payable as determined by the plan as a lump sum within three months of the effective date or in equal monthly installments over a period of five years, commencing within three months of the effective date, with no adjustment for interest.
Notice 2021-38. Notice 2021-38 provides guidance under Code Section 432(k). Notice 2021-38 provides that, under Code Section 432(k)(2)(A)(i), if an eligible multiemployer plan receiving special financial assistance was previously amended to suspend benefits under Code Section 432(e)(9) or Section 4245(a) of ERISA, or had suspended benefits operationally under Code Section 418E(a) without adopting a plan amendment, the plan must be amended to reinstate those suspended benefits, effective as of the month in which the special financial assistance is paid to the plan, for individuals who are participants or beneficiaries as of that month.
Notice 2021-38 also provides that under Code Section 432(k)(2)(A)(ii), an eligible multiemployer plan that receives special financial assistance must be amended to provide make-up payments to individuals who are participants or beneficiaries on, and who have commenced benefits by, the date the special financial assistance is paid to the plan. The make-up payments to a participant or a beneficiary must be paid, as determined by the plan sponsor, either as a lump sum within three months of the date the special financial assistance is paid to the plan or in equal monthly installments over a period of five years, commencing within three months of the date the special financial assistance is paid. The plan amendment providing for the make-up payments must also specify which distribution form (that is, a lump-sum payment or monthly installments) will apply for the make-up payments to a participant or beneficiary.
Part B. There are no 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.
Publication
Notice 2021-64 will appear in Internal Revenue Bulletin (IRB) 2021-50 on Dec. 13, 2021.
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