The IRS recently extended the deadline for defined benefit plan sponsors to adopt amendments to comply with Section 436 of the Internal Revenue Code of 1986, as amended (the Code). Code Section 436 was added by the Pension Protection Act of 2006 (PPA) and contains limitations on benefit payments and accruals for defined benefit plans that do not meet the funding targets required by PPA.
Please click here for a discussion of the new deadlines.
In October 2011, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2011-85 (Notice), announcing their intent to extend certain requirements applicable to hybrid pension plans such as cash balance plans. Given the highly technical nature of cash balance plans and the related government guidance, it is important to carefully understand the scope of the relief. In a separate matter affecting cash balance plans, the Pension Benefit Guaranty Corporation also recently published a proposed rule on terminating cash balance and hybrid plans. The proposed rule is intended to implement changes made by the Pension Protection Act of 2006. Comments on the proposed rule are due December 30, 2011.
Please click here for more information on this recent guidance.
Revenue Procedure 2011-44 modifies the procedures for submitting a private letter ruling request that a retirement plan constitutes a church plan to include a requirement that the applicant provide a notice to certain interested persons. The guidance provides rules regarding the timing and method for providing the notice as well as a Model Notice that applicants can modify as required.
Letter ruling applicants are required to provide a notice to each plan participant, beneficiary, QDRO alternate payee, and any employee organization representing employees who are plan participants (the interested parties). The notice informs recipients that the plan is not protected by ERISA’s statutory protections, including eligibility rules, vesting rules and minimum funding requirements.
A request for a letter ruling filed on or after September 26, 2011 must include a copy of the notice along with a statement that the notice was provided interested parties. An applicant whose letter ruling request is pending with the Internal Revenue Service (IRS) on September 26, 2011 must submit by November 25, 2011, a copy of the notice along with a cover letter containing a statement that references the pending request and the date the notice was provided to interested persons. The IRS may consider the letter ruling request as withdrawn if the notice is submitted after the November 25, 2011 deadline. If the applicant fails to submit the notice, the IRS will not rule on the pending request.
Plan sponsors with pending letter ruling requests should provide the notice to interested parties as soon as possible, and provide a copy to the IRS no later than November 25, 2011.
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