Notice 2009-97: Extension of Limited PPA Amendments for Limited Plan Types
The IRS released Notice 2009-97 on December 11, 2009 providing an extension of certain PPA provisions for Defined Benefit Plans and other limited plan types.
Please note that Notice 2009-97 does not delay the amendment deadline for a number of required PPA provisions. In general, all DB and all DC plans will still need to be amended for PPA provisions by the last day of the plan year beginning on or after January 1, 2009.
Although this delay may be helpful for individually drafted plans that are unsure about language to use in PPA Amendments, Notice 2009-97 will not likely be of assistance for most retirement plans. Plans that make use of the Notice's extended deadlines will still need to be amended for a number of PPA provisions by the end of the 2009 plan year and will then need to amend by the end of the 2010 plan year for those provisions with a delayed amendment deadline.
The relevant PPA/Internal Revenue provisions with an extended amendment deadline include:
- Internal Revenue Code final 436 regulations (published October 2009; affecting defined benefit plans): Benefit Restrictions (Prohibited Payments) and Benefit Accruals for Single Employer Plans. Funding based limits apply to (i) unpredictable/contingent benefits, (ii) accelerated benefit distribution, and (iii) benefit accruals. Participants must receive notice of funding based limitations
within 30 days.
- Internal Revenue Code section 411(a)(13) and 411(b)(5) (regulations not yet published; affects Cash Balance plans): Employer contributions must vest within three years of service. Affected plans may not cease benefit accruals because Participant attains a certain age.
- Internal Revenue Code section 401(a)(35) (final regulations not yet published; affects plans invested in publicly traded employer securities):Plans invested in publicly traded employer securities will need to meet the diversification requirements set out in IRC 401(a)(35).
Plan provisions with an extended deadline have until the last day of the first plan year beginning on or after January 1, 2010 to amend for the relevant PPA provisions (December 31, 2010 for calendar year plans).
In sum, the deadlines extended by Notice 2009-97 provide extremely limited relief. All DB and DC plans must still be amended for remaining PPA provisions by the last day of the plan year beginning on or after January 1, 2009.
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