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IRS Provides Sample Amendment for Underfunded Single Employer DB Plans
The Internal Revenue Service (IRS) released Notice 2011-96, providing a sample plan amendment that plan sponsors can use to satisfy Internal Revenue Code §436 regarding limitations on the accrual and payment of benefits under certain underfunded single employer defined benefit plans. The notice also extends both the deadline to amend a plan and the period during which such an amendment is eligible for relief from the anti-cutback requirements of §411(d)(6).
The sample amendment has three parts. The first part contains provisions applicable to all plans. The second part contains two alternative provisions, one of which must be adopted with the first part of the sample amendment in the case of a multiple employer plan. The third part consists of four optional provisions that may be used to modify the first part of the sample amendment.
The adoption deadline is extended to the latest of:
- the last day of the first plan year that begins on or after January 1, 2012,
- the last day of the plan year for which § 436 is first effective for the plan, or
- the due date (including extensions) of the employer’s tax return for the tax year (determined in accordance with section 5.06(2) of Rev. Proc. 2007-44, in the case of a tax-exempt employer) that contains the first day of the plan year for which § 436 is first effective for the plan.
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