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IRS Notice 2017-72 Includes 2017 Required Amendments List
Practical Law Legal Update w-011-9709 (Approx. 5 pages)
IRS Notice 2017-72 Includes 2017 Required Amendments List
by Practical Law Employee Benefits & Executive Compensation
| Published on 06 Dec 2017 • USA (National/Federal) |
The Internal Revenue Service (IRS) issued Notice 2017-72, which includes the 2017 Required Amendments List for Qualified Retirement Plans. Individually designed plans must be amended by the expiration of the remedial amendment period included in the 2017 Required Amendments List (December 31, 2019) for any changes in qualification requirements included on the List.
On December 5, 2017, the IRS issued Notice 2017-72, which includes the 2017 Required Amendments List for Qualified Retirement Plans. Individually designed retirement plans must be amended by December 31, 2019 (the expiration of the remedial amendment period in the 2017 Required Amendments List) for any changes in qualification requirements included on the List.
Required Amendments List
IRS Revenue Procedure 2016-37 eliminated the staggered five-year remedial amendment cycles for individually designed retirement plans. The Revenue Procedure also announced that the IRS intends to publish annually a Required Amendments List, which will:
- List the statutory and administrative changes in qualification requirements that require a plan amendment and become effective during the plan year in which the List is published.
- Establish the deadline for a plan to be amended to comply with the requirements that are identified on the List.
The Required Amendments List has two parts:
- Part A, which provides the changes in qualification requirements that generally would require an amendment to most plans or most plans of the type affected by the change.
- Part B, which provides the changes in qualification requirements that the Treasury Department and the IRS anticipate will not require amendments in most plans, but might require an amendment because of an unusual plan provision in a particular plan.
The Treasury Department and the IRS anticipate that few plans have language that will need to be amended for annual, monthly, or other periodic changes to:
- The various dollar limits that are adjusted for cost of living increases as provided in Code Section 415(d) (26 U.S.C. § 415(d)).
- The spot segment rates used to determine the applicable interest rate under Code Section 417(e)(3) (26 U.S.C. § 417(e)(3)).
- The applicable mortality table under Code Section 417(e)(3) (26 U.S.C. § 417(e)(3)).
These changes are treated as included on the Required Amendments List for the year in which the changes are effective even though they are not directly referenced on that year's Required Amendments List.
The Required Amendments List does not include:
- Statutory changes in qualification requirements for which the Treasury Department and the IRS expect to issue guidance.
- Changes in qualification requirements that permit (but do not require) optional plan provisions.
- Changes in the tax laws affecting qualified plans that do not change the qualification requirements under Code Section 401(a) (26 U.S.C. § 401(a)).
Notice 2017-72
2017 Required Amendments List
Part A of the 2017 Required Amendments List includes:
- The final regulations on cash balance plans (79 Fed. Reg. 56442 (Sept. 19, 2014); 80 Fed. Reg. 70680-02 (Nov. 16, 2015)). Plan sponsors must amend cash balance plans, as needed, to comply with the regulations' provisions concerning market rate of return and other requirements that first apply to the plan for the 2017 plan year (see Practice Note, Cash Balance Plans).
- The benefit restrictions for certain defined benefit plans that are eligible cooperative plans or charity plans described in Section 104 of the Pension Protection Act of 2006. Eligible cooperative plans or charity plans that were not subject to the benefit restrictions in Code Section 436 (26 U.S.C. § 436) for the 2016 plan year are generally subject to the restrictions in plan years beginning on or after January 1, 2017.
Part B includes the final regulations on partial annuity distribution options for defined benefit pension plans (81 Fed. Reg. 62359 (Sept. 9, 2016)). Treasury Regulation Section 1.417(e)-1(d)(7) (26 C.F.R. § 1.417(e)-1(d)(7)) sets out the rules under which the minimum present value rules of Code Section 417(e)(3) (26 U.S.C. § 417(e)(3)) apply to the distribution of a portion of a participant's accrued benefit. Section 1.417(e)-1(d)(7) applies to distributions with annuity starting dates in plan years beginning on or after January 1, 2017. However, taxpayers may elect to apply Section 1.417(e)-1(d)(7) to earlier periods.
For information on model amendments for bifurcated benefit distribution options, see Legal Update, IRS Notice 2017-44 Provides Model Amendments to a Defined Benefit Plan Document to Add Bifurcated Benefit Distribution Options.
For more information on amendments required in 2017, see Article, Required 2017 Qualified Retirement Plan Amendments.
Remedial Amendment Period
For individually designed plans, Revenue Procedure 2016-37 extended the remedial amendment period for a disqualifying provision resulting from a change in qualification requirements to the end of the second calendar year that begins after the issuance of the Required Amendments List on which the change in qualification requirements appears. The plan amendment deadline is the date on which the remedial amendment period ends for a disqualifying provision.
Under Notice 2017-72, December 31, 2019 is both:
- The last day of the remedial amendment period for disqualifying provisions resulting from a change that appears on the 2017 Required Amendments List.
- The plan amendment deadline for a disqualifying provision resulting from a change in qualification requirements that appears on the 2017 Required Amendments List.