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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The IRS has issued guidance clarifying the interaction of various amendment timing deadlines for qualified plans, as detailed in IRS Rev. Proc. 2005-66 (see CCH Pension Plan Guide ¶17,299R-69), with deadlines set forth in other recently published guidance, such as IRS Notice 2005-5 (see CCH Pension Plan Guide ¶17,130N) and final regulations under Code Sec. 401(k) and 401(m) (see CCH Pension Plan Guide ¶24,507U). The guidance was issued in response to concerns from practitioners that deadlines for the adoption of certain plan amendments were ambiguous in light of the discrepancy between the deadlines in IRS Rev. Proc. 2005-66 and deadlines specified in other forms of guidance.
In 2003, the IRS issued final regulations that provided a retroactive annuity starting date (RASD) under the qualified joint and survivor annuity (QJSA) provisions of Reg. §1.417(e)-1, applicable to plan years beginning on or after January 1, 2004. Under IRS Rev. Proc. 2005-66, however, a sponsor of a single employer defined benefit plan with a calendar plan year that already provides for an RASD, but which did not comply with the final regulations, has a disqualifying provision, and must adopt an interim amendment by the employer's income tax return filing due date for the taxable year containing January 1, 2004, or December 31, 2004, whichever is later. If the plan does not provide for an RASD, and the sponsor wishes to change that, IRS Rev. Proc. 2005-66 mandates that such a discretionary amendment must be adopted by the end of the plan year in which the amendment is effective. The IRS is now stating that the deadline for these types of interim amendments will be December 31, 2005, or the otherwise applicable deadline under IRS Rev. Proc. 2005-66, whichever is later.
IRS Notice 2005-5 provides that, by the end of the first plan year ending on or after March 28, 2005, qualified plans, except for governmental and non-electing church plans, must be amended to comply with previously-issued automatic rollover rules (see CCH Pension Plan Guide ¶24,806P ) that govern the direct rollover of certain mandatory distributions. Under IRS Rev. Proc. 2005-66, a plan sponsor wishing to adopt an interim amendment to comply with the mandatory rollover requirements would have to do so by the later of the due date for filing the employer's income tax return for the taxable year including March 28, 2005, or the last day of the plan year that includes March 28, 2005. The IRS is now stating that the deadline for amendments that reflect the automatic rollover requirements of IRS Notice 2005-5 will be either the IRS Rev. Proc. 2005-66 deadlines or December 31, 2005, whichever is later.
Plan sponsors may apply final regulations governing cash or deferred arrangements under Code Sec. 401(k) and matching and employee contributions under Code Sec. 401(m), to any plan year that ends after December 29, 2004. Any amendment implementing the regulations for a plan year before the effective date, which is generally a plan year beginning on or after January 1, 2006, is a discretionary amendment, and, under IRS Rev. Proc. 2005-66, the deadline for a discretionary amendment is the end of the plan year in which the plan amendment is effective. The IRS is now stating that the deadline for adopting a discretionary amendment under the final regulations prior to the effective date is the end of the plan year in which the regulations are implemented, or December 31, 2005, whichever is later. The IRS cautions that this extended deadline does not override existing deadlines with regard to the adoption of a plan amendment prior to the beginning of a plan year, such as adding a qualified cash or deferred arrangement to a profit-sharing plan, or adding a safe harbor feature to a 401(k) plan. Further, for proposed amendments to the regulations relating to designated Roth contributions (see CCH Pension Plan Guide ¶20,261M ), the regulatory effective date is proposed to be the same as the effective date for the 401(k) regulations. To facilitate timely adoption of any discretionary amendments, which, under IRS Rev. Proc. 2005-66, is the end of the plan year in which the plan amendment is effective, the IRS has announced that it intends to issue a sample amendment for designated Roth contributions after publication of final 401(k) regulations, as amended for designated Roth contributions.
For individually designed defined benefit plans, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) remedial amendment period relating to required minimum distributions under Code Sec. 401(a)(9) ended by the last day of the first plan year beginning on or after January 1, 2005, according to IRS Notice 2001-42 (see CCH Pension Plan Guide ¶17,121N ). The IRS is providing that the remedial amendment date has been extended by IRS Rev. Proc. 2005-66 to the end of the initial five-year remedial amendment cycle, and to the end of the initial six-year remedial amendment cycle for pre-approved plans.
The IRS has also stated that the following plan amendment deadlines will apply, as opposed to deadlines set forth in IRS Rev. Proc. 2005-66:
the extended date of January 1, 2007, as set forth in IRS Rev. Proc. 2005-76 (see CCH Pension Plan Guide ¶17,299R-76 ). IRS Rev. Proc. 200576 provides an extended deadline for taking corrective action to be in operational compliance with Central Laborers’ Pension Fund v. Heinz (see CCH Pension Plan Guide ¶23,988C), in which the U.S. Supreme Court held that ERISA prohibits a plan amendment from expanding postretirement employment categories that would have the effect of suspending the payment of accrued early retirement benefits;
the deadline for transitional relief for technical corrections with regard to certain defined contribution plans maintained by professional employer organizations (PEOs), as set forth in IRS Notice 2001-42, and as extended by IRS Rev. Proc. 2005-66, which is the end of the initial five-year remedial amendment cycle (or six-year remedial amendment cycle for pre-approved plans);
the deadline to amend plans to comply with changes to Code Sec. 415(b)(2)(E)(ii) , applicable to plan years beginning in 2004 and 2005, as set forth in the Pension Funding Equity Act of 2004, which is the last day of the first plan year beginning on or after January 1, 2006; and
the deadline for sponsors of plans that do not provide for loans or hardship distributions for taxpayers adversely affected by Hurricane Katrina, to amend their plans to provide for such loans or distributions, which is the end of the first plan year beginning after December 31, 2005, as set forth in IRS Announcement 200570 (see CCH Pension Plan Guide ¶17,097S-74).
The IRS has also stated that it will not treat the adoption of good faith plan amendments that reflect the qualification changes in this latest piece of guidance as adversely affecting the pre-approved status of a master and prototype plan. In addition, the IRS states that volume submitter plans may be amended by the sponsoring employer or practitioner, in accordance with plan terms, without causing the plans to fail to be volume submitter plans.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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