Required Amendments List for Individually Designed Retirement Plans

On December 4, 2019, the Internal Revenue Service ("IRS") published IRS Notice 2019-64, which details the 2019 Required Amendments List for qualified retirement plans. This year’s Required Amendment List covers the new hardship withdrawal rules and a new regulation impacting certain cash balance pension plans.

Background

The Required Amendments Lists establish the date by which plan amendments must be made for changes contained on the lists. In general, plan sponsors must adopt any item on the Required Amendment List by the end of the second calendar year following the year the list is published. All Required Amendments Lists apply 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).

Generally, the Required Amendment List will not include a change to the requirements until guidance regarding the change (including any model amendments) has been provided in regulations or in other guidance published by the IRS. However, the IRS may include items in other situations, for instance, when a statutory change is enacted and it is anticipated that no guidance will be issued.

2019 Required Amendments List 

Final regulations relating to hardship distributions.

In 2019, the IRS issued final regulations that govern qualifying hardships for 401(k) and 403(b) plans, the funds that are available for hardship distributions, and the standards that are used to determine whether those funds are needed to relieve a participant’s hardship.

The 2019 Required Amendments List indicates that plans must be amended to reflect the final regulations if the plan contains one of the following provisions:
 

1. Plans that provide for a suspension of elective deferrals or employee contributions as a condition for obtaining a hardship distribution of elective deferrals; or
2. Plans that do not require a representation from an employee who requests a hardship distribution that the employee has sufficient liquid assets reasonably available to satisfy the “immediate and heavy financial need” created by the hardship. 

The operational changes required by the final regulations apply to hardship distributions that are made on or after January 1, 2020. The deadline to adopt the formal amendments required under the final regulations is December 31, 2021. Different remedial amendment periods may apply to new plans and governmental plans. 

Final regulations regarding cash balance/hybrid defined benefit plans.

Cash balance/hybrid defined benefit plans that are maintained under one or more collective bargaining agreements ratified on or before November 13, 2015, must be amended to comply with the market rate of return and other aspects of the final regulations. These regulations first became applicable for the plan year beginning on or after the later of: (1) January 1, 2017, or (2) the earlier of (i) January 1, 2019, or (ii) the date on which the last of those collective bargaining agreements terminates (without regard to any extension granted on or after November 13, 2015).

The relief from the anti-cutback requirements of Code § 411(d)(6) provided in 1.411(b)(5)-1(e)(3)(vi) applies only to plan amendments that are adopted before the effective date of those regulations.

The new year is a good opportunity for plan sponsors to review their qualified retirement plans to ensure plan operations coincide with plan terms. Additional information is available 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' changes to its determination letter program.

To discuss the impact of the 2019 Required Amendments List on your plan documents, or for more information about Comply Now, please contact Audra Ferguson-Allen, Gary Blachman, Rob Gauss, Lisa Harrison, Melissa Proffitt, Tara Sciscoe, Kathleen Sheil Scheidt, Chris Sears, or the Ice Miller LLP Employee Benefits attorney with whom you most closely work.

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.