IRS Issues 2020 Required Amendments List

The Internal Revenue Service ("IRS") issued the 2020 Required Amendments List under IRS Notice 2020-83 on November 20, 2020. The IRS publishes an annual Required Amendments List, which generally applies to changes in requirements that become effective on or after January 1 of that year. The Required Amendments List applies to both individually designed plans qualified under Internal Revenue Code ("Code") § 401(a) and individually designed plans that satisfy the requirements of Code § 403(b).

Difficulty of Care Payments

The 2020 Required Amendments List addresses the difficulty of care payments treated as compensation for retirement contribution limits as provided for in the Setting Every Community Up for Retirement Enhancement Act ("SECURE Act"), which became law on December 20, 2019. If an individual care provider is providing care to a person in his or her home who has a physical, mental or emotional handicap, the difficulty of care payments received are generally excluded from income. For employers who offer difficulty of care payments, the SECURE Act amends Code § 415(c) to include difficulty of care payments as defined in Code § 131(c). In effect, this allows the Code § 415(c)(1) compensation of a participant to be increased by the amount of the difficulty of care payments. Plans of employers who have provided for such payments during plan years beginning after December 31, 2015, and before January 1, 2021, must be amended by the last day of the first plan year beginning on or after January 1, 2022 (last day of the first plan year beginning on or after January 1, 2024 for an applicable collectively bargained plan).

If an employer begins making difficulty of care payments to employees in future years, the plan must be amended to include such payments in the definition of Code § 415(c)(1) compensation by the end of the second calendar year following the calendar year in which the employer begins such payments. A plan is not required to be amended to include such payments in the definition of Code § 415(c)(1) compensation if an employer does not make such payments to employees eligible to participate in the plan.

For more information regarding the difficulty of care payments treated as compensation for retirement contribution limits, please refer to our e-alert dated January 6, 2020 entitled "SECURE Act Becomes Law - Private Sector Retirement Plan Considerations" and our e-alert dated October 6, 2020 entitled "IRS Issues Q&A Guidance for the SECURE Act and Miners Act."

Ice Miller’s Comply Now Program

In our prior e-alert entitled "Introducing Ice Miller's Qualified Plan Comply Now Program," which addressed how Ice Miller can assist you with keeping your plan documents in compliance with the IRS ongoing changes in qualification requirements in light of the IRS' near termination of its determination letter program.

To discuss the impact of the 2020 Required Amendments List on your plan documents, or for more information about Comply Now, please contact Gary Blachman, Kathleen Sheil Scheidt, Melissa Proffitt, Sarah Funke, Ian Minkin, Austin Anderson, or the Ice Miller Employee Benefits attorney with whom you most closely work. Please contact our COVID-19 Task Force if you have any questions about managing the risks of the coronavirus pandemic. Also see our Coronavirus (COVID-19) Resource Center for additional resources, which is updated daily.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.