IRS Notice 2021-64 Provides 2021 Required Amendments List

Practical Law Legal Update w-033-6036 (Approx. 6 pages)

IRS Notice 2021-64 Provides 2021 Required Amendments List

by Practical Law Employee Benefits & Executive Compensation

Required Amendments List

IRS Revenue Procedure 2016-37 eliminated the staggered five-year remedial amendment cycles for individually designed retirement plans (see Legal Update, IRS Provides Determination Letter Guidance in Revenue Procedure 2016-37).

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.

In Revenue Procedure 2019-39, the IRS established recurring remedial amendment periods for individually designed 403(b) plans with form defects that occur after March 31, 2020 (see Legal Updates, IRS Revenue Procedure 2019-39 Establishes Recurring Remedial Amendment Periods for 403(b) Plans). In Notice 2020-35, the IRS extended the end of the initial remedial amendment cycle for Code Section 403(b) plans from March 31, 2020, to June 30, 2020 (see Legal Update, IRS Extends Additional Deadlines Due to COVID-19 in Notice 2020-35).

The Required Amendments List has two parts:

Part A, which provides the changes in 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 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 requirements for which the Treasury Department and the IRS expect to issue guidance.
Changes in requirements that permit (but do not require) optional plan provisions.
Changes in the tax laws affecting qualified plans or 403(b) plans that do not change the requirements under Code Section 401(a) (26 U.S.C. § 401(a)) or Code Section 403(b) (26 U.S.C. § 403(b)).

Notice 2021-64

2021 Required Amendments List

Part A of the 2021 Required Amendments List includes an amendment for multiemployer plans that apply for special financial assistance under ERISA Section 4262 and Code Section 432(k), which were added by Section 9704 of the American Rescue Plan Act of 2021 (ARPA-2021) (see Legal Update, $1.9 Trillion COVID-19 Stimulus Legislation Includes COBRA Premium Assistance, Retirement Plan Funding Relief, and an Expansion of Covered Employees Under Section 162(m) and Practice Note, Multiemployer Pension Plans).

Code Section 432(k)(2)(A)(i) provides that an eligible multiemployer plan receiving special financial assistance under ERISA Section 4262 must reinstate any benefits that were suspended effective as of the first month in which the effective date for the special financial assistance occurs, for participants and beneficiaries as of such month. Code Section 432(k)(2)(A)(ii) provides that an eligible multiemployer plan receiving special financial assistance under ERISA Section 4262 must also provide payments equal to the amount of benefits previously suspended to any participants or beneficiaries in pay status as of the effective date of the special financial assistance, payable as a lump sum or in equal monthly installments.

IRS Notice 2021-38 requires plan amendments for plans receiving special financial assistance (see Legal Update, PBGC's Interim Final Rule Implements the Special Financial Assistance Program (SFAP) and IRS Notice 2021-38 Provides Related Guidance). Specifically, it provides that under:

Code Section 432(k)(2)(A)(i), if an eligible multiemployer plan receiving special financial assistance was previously amended to suspend benefits or had suspended benefits operationally without adopting a plan amendment, the plan must be amended to reinstate those suspended benefits, effective as of the month in which the special financial assistance is paid to the plan, for individuals who are participants or beneficiaries as of that month.
Code Section 432(k)(2)(A)(ii), an eligible multiemployer plan that receives special financial assistance must be amended to provide make-up payments to individuals who are participants or beneficiaries on, and who have commenced benefits by, the date the special financial assistance is paid to the plan. The make-up payments to a participant or a beneficiary must be paid, as determined by the plan sponsor, either as a lump sum or in equal monthly installments. The plan amendment providing for the make-up payments must specify which of these two distribution forms will apply for the make-up payments to participants and beneficiaries.

Part B does not include changes that might require a plan amendment because of an unusual plan provision in a particular plan.

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 2021-64, December 31, 2023, is both:

The last day of the remedial amendment period for disqualifying provisions and form defects resulting from a change that appears on the 2021 Required Amendments List.
The plan amendment deadline for a disqualifying provision or form defect resulting from a change in requirements that appears on the 2021 Required Amendments List.

IRS Notice 2021-64 Provides 2021 Required Amendments List | Practical Law