The IRS has updated the information it provides to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements effective during a calendar year. The operational compliance list:
- identifies matters that may involve either mandatory or discretionary plan amendments depending on the particular plan;
- may reference other significant guidance that affects daily plan operations; and
- is available on the IRS webpage only.
The IRS updates the OC list periodically to reflect new legislation and IRS guidance. The OC list is not intended to be a comprehensive list of all IRS guidance or new legislation put in place and enacted in a year that could affect a particular plan.
2020 Changes
The IRS has updated the operational compliance list to include changes that are effective in 2020:
- Final regulations relating to hardship distributions
- Extension of temporary relief for closed defined benefit pension plans
- Additional temporary nondiscrimination relief for closed defined benefit pension plans
- Increase in 10 percent cap for automatic enrollment safe harbor after first plan year
- Rules relating to election of safe harbor 401(k) status
- Portability of lifetime income options
- Penalty-free withdrawals from retirement plans for individuals in case of birth or adoption
- Increase in age for required beginning date for mandatory distributions
- Difficulty of care payments treated as compensation for retirement contribution limitations
- Modification of nondiscrimination rules to protect older, longer service participants
- Modification of required distribution rules for designated beneficiaries
- Provisions relating to plan amendments
403(b) Plans
In order to meet the requirements of Internal Revenue Code Section 403(b), a plan must comply operationally with each relevant requirement, even if the requirement is not included on the OC List. A plan must be operated in compliance with a change in qualification requirements from the effective date of the change.
Effective in 2020, under Section 111 of the SECURE Act, employees of church-controlled organizations who separate from the service of a church may participate in a 403(b)(9) retirement income account. This section of the SECURE Act clarifies that an employee described in Internal Revenue Code Section 414(e)(3)(B), which includes:
- any ministers (regardless of the source of income);
- employees of a tax-exempt organization controlled by or associated with a church (whether or not it is a qualified church-controlled organization described in Internal Revenue Code Section 3121(w)(3)(B)); and
- certain employees who separate from the service of a church, may participate in an Section 403(b)(9) retirement income account.
The amendment made by Section 111 applies to years beginning before, on, or after Dec. 20, 2019, the date the SECURE Act was enacted.
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