n-17-72.pdf

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2017 Required Amendments List for Qualified Retirement Plans

Notice 2017-72

I. PURPOSE

This notice contains the Required Amendments List for 2017 (2017 RA List).
Section 5 of Rev. Proc. 2016-37, 2016-29 I.R.B. 136, provides that, in the case of an
individually designed plan, the remedial amendment period for a disqualifying provision
arising as a result of a change in qualification requirements generally is extended to the
end of the second calendar year that begins after the issuance of the Required
Amendments List (RA List) in which the change in qualification requirements appears.
Pursuant to section 5.05(3) of Rev. Proc. 2016-37, this notice provides that
December 31, 2019, is generally the last day of the remedial amendment period with
respect to a disqualifying provision arising as a result of a change in qualification
requirements that appears on this 2017 RA List. As a result, under sections 8.01 and
5.05(3) of Rev. Proc. 2016-37, December 31, 2019, is also generally the plan
amendment deadline for a disqualifying provision arising as a result of a change in
qualification requirements that appears on the 2017 RA List. However, a later date may
apply to a governmental plan (as defined in § 414(d)) pursuant to sections 8.01 and
5.06(3) of Rev. Proc. 2016-37.

II. BACKGROUND
Section 401(b) of the Internal Revenue Code (Code) provides a remedial
amendment period during which a plan may be amended retroactively to comply with
the qualification requirements under § 401(a). Section 1.401(b)-1 describes the
disqualifying provisions that may be amended retroactively and the remedial
amendment period during which retroactive amendments may be adopted. Those
regulations also grant the Commissioner the discretion to designate certain plan
provisions as disqualifying provisions and to extend the remedial amendment period.

Rev. Proc. 2016-37 eliminates, as of January 1, 2017, the five-year remedial
amendment cycle system for individually designed plans that was set forth in
Rev. Proc. 2007-44, 2007-2 C.B. 54.

Sections 5.05(3) and 5.06(3) of Rev. Proc. 2016-37 extend the remedial
amendment period for individually designed plans to correct disqualifying provisions that
arise as a result of a change in qualification requirements. Under section 5.05(3), the
remedial amendment period for a plan that is not a governmental plan (as defined in
§ 414(d)) is extended to the end of the second calendar year that begins after the
issuance of the RA List on which the change in qualification requirements appears.

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Section 5.06(3) provides a special rule for governmental plans that could further extend
the remedial amendment period in some cases.

Section 8.01 of Rev. Proc. 2016-37 provides that the plan amendment deadline
with respect to a disqualifying provision described in section 5 of Rev. Proc. 2016-37 is
the date on which the remedial amendment period ends with respect to that
disqualifying provision.

Section 9 of Rev. Proc. 2016-37 provides that the Department of the Treasury
(the Treasury Department) and the Internal Revenue Service (IRS) intend to publish
annually an RA List. In general, a change in qualification requirements will not appear
on an RA List until guidance with respect to that change (including, in certain cases,
model amendments) has been provided in regulations or in other guidance published in
the Internal Revenue Bulletin. However, in the discretion of the Treasury Department
and the IRS, a change in qualification requirements may be included on an RA List in
other circumstances, such as in cases in which a statutory change is enacted and the
Treasury Department and the IRS anticipate that no guidance will be issued.

III. CONTENT AND ORGANIZATION OF RA LIST

In general, an RA List includes statutory and administrative changes in
qualification requirements that are first effective during the plan year in which the list is
published.
1
However, an RA List does not include guidance issued or legislation
enacted after the list has been prepared and also does not include:

• Statutory changes in qualification requirements for which the Treasury
Department and the IRS expect to issue guidance (which would be included
on an RA List issued in a future year);
• Changes in qualification requirements that permit (but do not require) optional
plan provisions (in contrast to changes in the qualification requirements that
cause existing plan provisions, which may include optional plan provisions
previously adopted, to become disqualifying provisions);
2
or

1
RA Lists also may include changes in qualification requirements that were first effective in a
prior year that were not included on a prior RA List under certain circumstances, such as
changes in qualification requirements that were issued or enacted after the prior year’s RA List
was prepared.

2
The remedial amendment period and plan amendment deadline for discretionary changes to
the terms of a plan are governed by sections 5.05(2), 5.06(2), and 8.02 of Rev. Proc. 2016-37,
and are not affected by the inclusion of a change in qualification requirements on an RA List.

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• Changes in the tax laws affecting qualified plans that do not change the
qualification requirements under § 401(a) (such as changes to the tax
treatment of plan distributions, or changes to the funding requirements for
qualified plans).
The RA List is divided into two parts. Part A covers changes in qualification
requirements that generally would require an amendment to most plans or to most plans
of the type affected by the change.

Part B includes changes in qualification requirements that the Treasury
Department and the IRS anticipate will not require amendments to most plans, but
might require an amendment because of an unusual plan provision in a particular plan.
If a change affects a particular qualification requirement that most plans incorporate by
reference, Part B would include the change because a particular plan might not
incorporate the qualification requirement by reference and, thus, might contain language
inconsistent with the change. For example, as provided in the 2016 RA List, if a defined
benefit plan incorporates the limitation of § 436(d)(2) by reference to the statute or
regulations (or through the use of the sample amendment in Notice 2011-96, 2011-52
I.R.B. 915), no amendment to the plan would be required to comply with the changes
made by section 2003 of the Highway Transportation and Funding Act of 2014.
P.L. 113-159. However, a plan that sets forth the substantive requirements of
§ 436(d)(2) and that does not incorporate the limitation of § 436(d)(2) by reference to
the statute or regulations, or through the use of the sample amendment in
Notice 2011-96, may need to be amended.

Annual, monthly, or other periodic changes to (1) the various dollar limits that are
adjusted for cost of living increases as provided in § 415(d) or other Code provisions,
(2) the spot segment rates used to determine the applicable interest rate under
§ 417(e)(3), and (3) the applicable mortality table under § 417(e)(3), are treated as
included on the RA List for the year in which such changes are effective even though
they are not directly referenced on that RA List. The Treasury Department and the IRS
anticipate that few plans have language that will need to be amended on account of
these changes.

The fact that a change in a qualification requirement is included on the RA List
does not mean that a plan must be amended as a result of that change. Each plan
sponsor must determine whether a particular change in a qualification requirement
requires an amendment to its plan.

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IV. 2017 REQUIRED AMENDMENTS LIST

Part A. Changes in qualification requirements that generally would require an
amendment to most plans or to most plans of the type affected by the
change.

• Final regulations regarding cash balance/hybrid plans (79 Fed. Reg.
56442, 80 Fed. Reg. 70680). Cash balance/hybrid plans must be
amended to the extent necessary to comply with those portions of the
regulations regarding market rate of return and other requirements that
first become applicable to the plan for the plan year beginning in 2017.
(This requirement does not apply to those collectively bargained plans that
do not become subject to these portions of the regulations until 2018 or
2019 under the extended applicability dates provided in § 1.411(b)(5)-
1(f)(2)(B)(3).)

Note: The relief from the anti-cutback requirements of § 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 these regulations.

Note: See also Notice 2016-67, 2016-47 I.R.B. 748, which addresses the
applicability of the market rate of return rules to implicit interest pension
equity plans.

• Benefit restrictions for certain defined benefit plans that are eligible
cooperative plans or eligible charity plans described in section 104 of the
Pension Protection Act of 2006, as amended (“PPA”)). An eligible
cooperative plan or eligible charity plan that was not subject to the benefit
restrictions of § 436 for the 2016 plan year under § 104 of PPA ordinarily
becomes subject to those restrictions for plan years beginning on or after
January 1, 2017. However, a plan that fits within the definition of a “CSEC
plan” (as defined in § 414(y)) continues not to be subject to those rules
unless the plan sponsor has made an election for the plan not to be
treated as a CSEC plan.
Part B. Other changes in qualification requirements that may require an amendment.

• Final regulations regarding partial annuity distribution options for defined
benefit pension plans (81 Fed. Reg. 62359). Defined benefit plans that
permit benefits to be paid partly in the form of an annuity and partly as a
single sum (or other accelerated form) must do so in a manner that
complies with the § 417(e) regulations. Section 1.417(e)-1(d)(7) provides
rules under which the minimum present value rules of § 417(e)(3) apply to
the distribution of only a portion of a participant’s accrued benefit.

5

Section 1.417(e)-1(d)(7) applies to distributions with annuity starting dates
in plan years beginning on or after January 1, 2017, but taxpayers may
elect to apply § 1.417(e)-1(d)(7) with respect to any earlier period.

Note: The regulations provide relief from the anti-cutback rules of
§ 411(d)(6) for certain amendments adopted on or before
December 31, 2017.

Note: Model amendments that a sponsor of a qualified defined benefit
plan may use to amend its plan to offer bifurcated benefit distribution
options in accordance with these final regulations are provided in
Notice 2017-44, 2017-36 I.R.B. 226.

V. DRAFTING INFORMATION

The principal author of this notice is Angelique Carrington of the Office of
Associate Chief Counsel (Tax Exempt and Government Entities). For further
information regarding this notice, contact Ms. Carrington at (202) 317-4148 (not a toll-
free number).