Operational Compliance List

 

The Operational Compliance List ("OC" List) is provided per Rev. Proc. 2016-37, Section 10, and Rev. Proc. 2019-39, Section 9, to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements and Internal Revenue Code (IRC) Section 403(b) requirements effective during a calendar year. The OC List:

  • Identifies matters that may involve either mandatory or discretionary plan amendments depending on the particular plan.
  • May reference other significant guidance that affects daily plan operations.
  • Is available on this webpage only; it will not be published in the Internal Revenue Bulletin.

The OC list doesn't include annual, monthly, or other periodic changes that routinely occur (such as, cost-of-living increases, spot segment rates, and applicable mortality tables). You can find these items on the Employee Plans Recent Published Guidance webpage.

We'll update the OC List periodically to reflect new legislation and IRS guidance and, beginning in 2020, will indicate the month that new items are added. Also, beginning in 2020, we will not update the listings for prior years except to the extent new legislation or IRS guidance is retroactively effective.

The OC List is not intended to be a comprehensive list of every item of IRS guidance or new legislation for a year that could affect a particular plan (and, because the OC List is updated periodically, items may not appear on it before they're effective.) For a complete list of IRS guidance, see Recent Published Guidance.

Note: In order to meet the qualification requirements or the IRC Section 403(b) requirements, a plan must comply operationally with each relevant requirement, even if the requirement is not included on the OC List. A plan must be operated in compliance with a change in requirements from the effective date of the change.

Effective in 2022

Final Regulations relating to updated life expectancy and distribution period tables used for purposes of determining minimum required distributions (85 Fed. Reg. 72472). These regulations provide guidance relating to the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans and IRC Section 403(b) plans. The final regulations apply to distribution calendar years (as defined in Treasury Regs. Section 1.401(a)(9)-5, Q&A-1(b)), beginning on or after January 1, 2022. (Added March 2021)

Effective in 2021

Qualified cash or deferred arrangements (CODAs) must allow long-term employees working at least 500 but less than 1,000 hours per year to participate (Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Section 112). This section of the SECURE Act amends IRC Section 401(k)(2)(D) to provide that a CODA may not require an employee to complete a period of service that extends beyond the close of the earlier of: (i) the period permitted under IRC Section 410(a)(1) (disregarding IRC Section 410(a)(1)(B)(i)); or (ii) subject to IRC Section 401(k)(15), the first period of three consecutive 12‑month periods during each of which the employee has completed at least 500 hours of service. Section 112 also amends the IRC to add IRC Section 401(k)(15), which sets forth additional provisions related to IRC Section 401(k)(2)(D)(ii) (the new rule regarding three consecutive 12-month periods for eligibility purposes). IRC Section 401(k)(15)(B)(iii) provides special vesting rules for an employee who becomes eligible to participate in a CODA solely by reason of satisfying the requirements of IRC Section 401(k)(2)(D)(ii) (a long-term, part-time employee). The amendments made by Section 112 apply to plan years beginning after December 31, 2020, except that 12-month periods beginning before January 1, 2021, are not taken into account for purposes of determining a long-term, part-time employee's eligibility to participate under IRC Section 401(k)(2)(D)(ii) (as added by such amendments). (Added March 2021)

  • Miscellaneous Changes Under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Bipartisan American Miners Act of 2019 (Notice 2020-68). Section C of this notice provides a question and answer related to long-term part-time employees under SECURE Act Section 112. (Added March 2021)

Extension of Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qualified Retirement Plans (Notice 2021-03). This notice extends, from January 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42 from the physical presence requirement in Treasury Regs. Section 1.401(a)-21(d)(6) for participant elections required to be witnessed by a plan representative or a notary public, including a spousal consent required under IRC Section 417, provided certain requirements are satisfied. This notice also solicits comments on whether the relief from the physical presence requirement should be made permanent. (Added March 2021)

Effective in 2020

Final regulations relating to hardship distributions (84 Fed. Reg. 49651). These regulations amended the rules relating to hardship distributions from IRC Section 401(k) plans to reflect statutory changes affecting those plans, including changes made by the Bipartisan Budget Act of 2018, Pub. L. 115-123 (BBA 2018), and the Tax Cuts and Jobs Act, Pub. L. 115-97 (TCJA). In response to BBA 2018, the regulations modified the former IRC Section 401(k) regulations by, among other things: deleting the 6-month prohibition on elective contributions following a hardship distribution; providing that the maximum amount available for distribution upon hardship includes elective contributions, qualified nonelective contributions, qualified matching contributions, and earnings on all these contributions; providing that a distribution is not treated as failing to be made upon the hardship of an employee solely because the employee does not take any available loan under the plan; and requiring that an employee requesting a hardship distribution provide a representation that the employee's immediate and heavy financial need cannot reasonably be relieved from resources specified in Treasury Regs. Section 1.401(k)-1(d)(3)(iv)(C). The regulations also modified the rules for determining when a distribution is necessary to satisfy a financial need and revised the list of expenses for which a distribution is deemed to be made on account of an immediate and heavy financial need, including modifying the expense for casualty losses by disregarding the changes to IRC Section 165 made by TCJA. New IRC Section 165(h)(5) provides that a casualty loss is deductible for taxable years 2018 through 2025 only if it results from a federally declared disaster. (Added May 2020)

These regulations generally also apply to hardship distributions under IRC Section 403(b) plans. However, income attributable to IRC Section 403(b) elective deferrals continues to be ineligible for distribution on account of hardship. Qualified nonelective contributions and qualified matching contributions in an IRC Section 403(b) plan that are not in a custodial account may be distributed on account of hardship, but qualified nonelective contributions and qualified matching contributions in an IRC Section 403(b) plan that are in a custodial account continue to be ineligible for distribution on account of hardship. (Added May 2020)

These regulations apply to distributions made on or after January 1, 2020. However, the regulations may be applied to distributions made in plan years beginning after December 31, 2018, and the prohibition on suspending an employee's elective contributions and employee contributions as a condition of obtaining a hardship distribution may be applied as of the first day of the first plan year beginning after December 31, 2018, even if the distribution was made in the prior plan year. In addition, the revised list of safe harbor expenses may be applied to distributions made on or after a date that is as early as January 1, 2018. (Added May 2020)

  • Note: Rev. Proc. 2020-9 clarifies that all plan amendments that relate to a plan's hardship distribution provisions and that are effective no later than January 1, 2020, are treated as integral to amendments that must be made to a plan as a result of the final IRC Section 401(k) hardship regulations. This treatment applies even if the required amendments are implemented earlier and made applicable to hardship distributions before January 1, 2020. Rev. Proc. 2020-9 also extends (to December 31, 2021) the deadline applicable to pre-approved plans for the adoption of interim amendments with respect to amendments that must be made to a plan as a result of the hardship regulations. Consistent with this treatment of IRC Section 401(k) plans, this same deadline will be applied with respect to amendments made to IRC Section 403(b) plans to reflect related changes made to the IRC Section 401(k) hardship regulations. (Added May 2020)

Extension of temporary relief for closed defined benefit pension plans (Notice 2019-49). This notice extends, to plan years beginning before 2021, relief from the nondiscrimination in amount requirement of Treasury Regs. Section 1.401(a)(4)-1(b)(2) provided to closed defined benefit plans under Notice 2014-5, as extended under Notice 2015-28, Notice 2016-57, Notice 2017-45, and Notice 2018-69. (Added May 2020)

Additional temporary nondiscrimination relief for closed defined benefit pension plans (Notice 2019-60). This notice provides additional temporary relief from the requirements of Treasury Regs. Section 1.401(a)(4)-4 relating to benefits, rights, and features to a closed defined benefit plan that generally meets the eligibility conditions for the temporary relief under Notice 2014-5, as extended under Notice 2015-28, Notice 2016-57, Notice 2017-45, Notice 2018-69, and Notice 2019-49. (Added May 2020)

Increase in 10 percent cap for automatic enrollment safe harbor after first plan year (SECURE Act, Section 102). This section of the SECURE Act provides that the qualified percentage applicable to qualified automatic contribution arrangements under IRC Section 401(k)(13) is increased from 10 percent to 15 percent (but retains the current 10 percent limit for the first plan year in which an employee defers). The amendments made by Section 102 apply to plan years beginning after December 31, 2019. (Added May 2020)

  • Guidance on Sections 102 and 103 of the SECURE Act with respect to safe harbor plans (Notice 2020-86). Section III of this notice provides questions and answers related to the increase in the 10-percent qualified-percentage cap for automatic enrollment safe harbor plans under SECURE Act Section 102. (Added March 2021)

Rules relating to election of safe harbor 401(k) status (SECURE Act, Section 103). This section of the SECURE Act removes the requirement to provide an annual safe harbor notice for nonelective safe harbor IRC Section 401(k) plans. This section also permits plan sponsors to adopt a safe harbor IRC Section 401(k) plan with nonelective contributions any time before the 30th day before the close of the plan year. Plan sponsors that make nonelective safe harbor contributions of at least 4 percent of compensation for a plan year may adopt this safe harbor design before the last day under IRC Section 401(k)(8)(A) for distributing excess contributions for the plan year. The amendments made by Section 103 apply to plan years beginning after December 31, 2019. (Added May 2020)

  • Guidance on Sections 102 and 103 of the SECURE Act with respect to safe harbor plans (Notice 2020-86). Section IV of this notice provides questions and answers related to the election of safe harbor plan status under SECURE Act Section 103. (Added March 2021)

Portability of lifetime income options (SECURE Act, Section 109). This section of the SECURE Act provides that qualified defined contribution plans under IRC Section 401(k) and IRC Section 403(b) plans may permit certain transfers and distributions of lifetime income investment options in cases in which such investment options are no longer authorized to be held as an investment option under the plan. The amendments made by Section 109 apply to plan years beginning after December 31, 2019. (Added May 2020)

Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111). This section of the SECURE Act clarifies that an employee described in IRC Section 414(e)(3)(B), which includes any ministers (regardless of the source of income), employees of a tax-exempt organization controlled by or associated with a church (whether or not it is a qualified church-controlled organization described in IRC Section 3121(w)(3)(B)), and certain employees who separate from the service of a church, may participate in an IRC Section 403(b)(9) retirement income account. The amendment made by Section 111 applies to years beginning before, on, or after December 20, 2019 (the date of enactment of the Act). (Added May 2020)

Penalty-free withdrawals from retirement plans for individuals in case of birth or adoption (SECURE Act, Section 113). This section of the SECURE Act amends IRC Section 72(t) to provide that the 10 percent additional tax on early distributions from certain retirement plans does not apply to qualified birth or adoption distributions. This section also (i) provides that qualified birth or adoption distributions are treated as meeting plan distribution requirements, (ii) provides that these distributions are not eligible rollover distributions for purposes of the direct rollover rules of IRC Section 401(a)(31), the notice requirements of IRC Section 402(f), and the mandatory withholding rules of IRC Section 3405, and (iii) provides certain rules for repayment of these distributions. The amendments made by Section 113 apply to distributions made after December 31, 2019. (Added May 2020)

  • Miscellaneous Changes Under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Bipartisan American Miners Act of 2019 (Notice 2020-68). Section D of this notice provides questions and answers related to qualified birth or adoption distributions under SECURE Act Section 113. (Added March 2021)

Increase in age for required beginning date for mandatory distributions (SECURE Act, Section 114). This section of the SECURE Act modifies IRC Section 401(a)(9) to increase the age on which the determination of required minimum distributions is based from age 70½ to age 72. The amendments made by Section 114 apply to distributions required to be made after December 31, 2019, with respect to individuals who attain age 70½ after that date. Present law continues to apply to individuals who attained age 70½ prior to January 1, 2020. (Added May 2020)

Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116). This section of the SECURE Act amends IRC Section 415(c) to provide that, with respect to an individual who, under IRC Section 131, excludes from gross income a qualified foster care payment that is a difficulty of care payment, compensation under IRC Section 415(c)(1)(B) is increased by the amount so excluded. The provision further provides that contributions allowed due to the increase in compensation are treated as investment in the contract and do not cause the plan to be treated as failing to meet any income tax requirements. This amendment is effective for plan years that begin on or after December 31, 2015. (Added May 2020)

  • Miscellaneous Changes Under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Bipartisan American Miners Act of 2019 (Notice 2020-68). Section E of this notice provides questions and answers related to difficulty of care payments under SECURE Act Section 116. (Added March 2021)

Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205). This section of the SECURE Act changes the nondiscrimination testing requirements (generally relating to testing contributions or benefits and compliance with the minimum participation rules) for a grandfathered group of employees with respect to a closed defined benefit plan by providing alternative nondiscrimination testing methods that the plan sponsor may choose to use. The amendments made by Section 205 are generally effective December 20, 2019 (the date of enactment of the Act), but there are special rules for earlier application in Section 205(c)(2), including that a plan sponsor may elect for the amendments made by this section of the SECURE Act to apply to plan years beginning after December 31, 2013. (Added May 2020)

Modification of required distribution rules for designated beneficiaries (SECURE Act, Section 401). This section of the SECURE Act changes the after-death required minimum distribution rules applicable to defined contribution plans. Generally, these rules are effective for distributions from defined contribution plans with respect to individuals who die after December 31, 2019. A later effective date may apply if a plan is an IRC Section 414(d) governmental plan, collectively bargained plan, or in other special circumstances. (Added May 2020)

Provisions relating to plan amendments (SECURE Act, Section 601). This section of the SECURE Act provides relief from the anti-cutback rules of IRC Section 411(d)(6) for amendments to any retirement plan or annuity contract pursuant to any amendment made by the SECURE Act or pursuant to any Treasury or Department of Labor regulation under this Act. This relief generally extends to the last day of the first plan year beginning on or after January 1, 2022, or such later time as the Secretary of the Treasury shall provide, and extends to the last day of the first plan year beginning on or after January 1, 2024, for IRC Section 414(d) governmental plans and collectively bargained plans. In order to qualify for the relief, the plan or contract generally must be operated in accordance with the legislative or regulatory amendment between its effective date and the date the amendment to the plan or contract is adopted. (Added May 2020)

  • Miscellaneous Changes Under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Bipartisan American Miners Act of 2019 (Notice 2020-68). Section G of this notice provides questions and answers related to plan amendments applicable to qualified plans and IRC Section 403(b) plans. (Added March 2021)

Reduction to minimum age for allowable in-service distributions (Bipartisan American Miners Act of 2019, (BAMA), Section 104). Prior to enactment of BAMA, IRC Section 401(a)(36) provided that a pension plan does not fail to be qualified solely because the plan provides that a distribution may be made from the plan to an employee who has attained age 62 and who is not separated from employment at the time of the distribution. This section of BAMA lowers the minimum age for allowable in-service distributions under IRC Section 401(a)(36) from 62 to 59½. The amendments made by Section 104 apply to plan years beginning after December 31, 2019. (Added May 2020)

  • Miscellaneous Changes Under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Bipartisan American Miners Act of 2019 (Notice 2020-68). Section F of this notice provides questions and answers related to the reduction to the minimum age for allowable in-service distributions under BAMA Section 104. (Added March 2021)
  • Minimum age for distributions during working retirement (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 208). This section of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 amends IRC Section 401(a)(36) to provide that, for certain employees in plans covering workers in the building and construction industry, the minimum age for allowable in-service distributions under that section is age 55, rather than age 59½. This exception applies with respect to employees who, on or before April 30, 2013, were participants in a multiemployer plan described in Section 4203(b)(1)(B)(i) of the Employee Retirement Income Security Act of 1974, if: (a) the trust was in existence before January 1, 1970; and (b) before December 31, 2011, at a time when the plan provided that distributions may be made to an employee who has attained age 55 and who is not separated from employment at the time of the distribution, the plan received at least one written determination from the IRS that the trust constituted a qualified trust under IRC Section 401. The amendment made by Section 208 applies to distributions made before, on, or after December 27, 2020 (the date of enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020). (Added March 2021)

Relief for certain major disasters (Taxpayer Certainty and Disaster Tax Relief Act of 2019, Section 202). This section of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides that a plan may offer participants affected by major disasters declared during the period beginning on January 1, 2018, and ending February 18, 2020, (a) new distribution options for "qualified disaster distributions," which are provided special tax treatment and recontribution options, and (b) plan loans of up to $100,000, subject to special repayment rules. To take advantage of the options provided under this legislation, the distributions must be made within the period beginning on the first day of an incident period for a qualified disaster and ending June 16, 2020, and the loans must be made within the period beginning December 20, 2019, and ending June 16, 2020. If the plan makes such distributions or loans, any necessary retroactive amendments implementing the special rules must be adopted on or before the last day of the first plan year beginning on or after January 1, 2020 (or for IRC Section 414(d) governmental plans, on or before the last day of the first plan year beginning on or after January 1, 2022), and, for an amendment with a retroactive effective date, the plan must be operated as if the amendment were in effect. (Added May 2020)

Treatment of custodial accounts on termination of IRC Section 403(b) plans (SECURE Act, Section 110). This section of the SECURE Act provides that the Secretary of the Treasury shall issue guidance to provide that, if an employer terminates the plan under which amounts are contributed to a custodial account under IRC Section 403(b)(7)(A), the plan administrator or custodian may distribute an individual custodial account in kind to a participant or beneficiary of the plan and the distributed custodial account shall be maintained by the custodian on a tax-deferred basis as an IRC Section 403(b)(7) custodial account, similar to the treatment of fully-paid individual annuity contracts under Rev. Rul. 2011-7, until amounts are actually paid to the participant or beneficiary. (Added March 2021)

  • Distribution of individual custodial accounts in kind upon termination of a § 403(b) plan (Rev. Rul. 2020-23). This revenue ruling addresses whether an IRC Section 403(b) plan funded through the use of IRC Section 403(b)(7) custodial accounts that takes the actions described in this revenue ruling has been terminated in accordance with the rules of Treas. Reg. Section 1.403(b)-10(a), and whether distributions made to participants or beneficiaries in connection with termination of the plan are includible in gross income. (Added March 2021)

Special rules for coronavirus related distributions (CARES Act, Section 2202 and COVID-related Tax Relief Act of 2020, Section 280). This section of the COVID-related Tax Relief Act of 2020 provides that, for certain individuals affected by the coronavirus, a plan may provide for: (a) "coronavirus-related distributions" during the period beginning January 1, 2020, and ending December 30, 2020, which are provided favorable tax treatment and recontribution options; (b) plan loans of up to $100,000, for loans made during the period beginning March 27, 2020, and ending September 22, 2020; and (c) a suspension of repayments on existing plan loans due during the period beginning March 27, 2020, and ending December 31, 2020. If a plan implements these special rules, any necessary retroactive amendments must be adopted on or before the last day of the first plan year beginning on or after January 1, 2022 (or for IRC Section 414(d) governmental plans, on or before the last day of the first plan year beginning on or after January 1, 2024), and, for an amendment with a retroactive effective date, the plan must be operated as if the amendment were in effect. (Added March 2021)

  • Guidance for Coronavirus Related Distributions from Retirement Plans Under the CARES Act (Notice 2020-50). This notice provides guidance relating to the application of CARES Act Section 2202 for qualified individuals and eligible retirement plans, including expanding the group of qualified individuals eligible for the special rules under CARES Act Section 2202 and clarifying that employers may choose whether, and to what extent, to implement the special rules. (Added March 2021)

Temporary waiver of required minimum distribution rules for certain retirement plans and accounts (CARES Act, Section 2203). This section of the CARES Act provides that (a) a defined contribution plan under IRC Section 401(a), 403(a), or 403(b) may waive the required minimum distribution rules of IRC Section 401(a)(9) for 2020; (b) any amount distributed during 2020 that is an eligible rollover distribution under IRC Section 402(c)(4), but would not have been an eligible rollover distribution had IRC Section 401(a)(9) applied during 2020, is not treated as an eligible rollover distribution for purposes of IRC Sections 401(a)(31) (relating to direct and automatic rollovers of eligible rollover distributions), 402(f) (relating to notices to recipients of eligible rollover distributions), and 3405(c) (relating to mandatory 20-percent withholding on eligible rollover distributions); and (c) retroactive amendments implementing Section 2203 must be adopted on or before the last day of the first plan year beginning after January 1, 2022 (or for IRC Section 414(d) governmental plans, on or before the last day of the first plan year beginning on or after January 1, 2024), and, for an amendment with a retroactive effective date, the plan must be operated as if the amendment were in effect. (Added March 2021)

  • Guidance on waiver of 2020 required minimum distributions (Notice 2020-51). This notice provides guidance relating to the waiver of 2020 required minimum distributions described in IRC Section 401(a)(9) from certain retirement plans under CARES Act Section 2203, and provides a sample plan amendment that, if adopted, would provide participants a choice whether to receive waived required minimum distributions and certain related payments. (Added March 2021)

Application of cooperative and small employer charity pension plan rules to certain charitable employers (CARES Act, Section 3609). This section of the CARES Act adds IRC Section 414(y)(1)(D) to the Code. IRC Section 414(y)(1)(D) provides that a cooperative and small employer charity pension plan (CSEC plan) is defined to include a defined benefit plan that, as of January 1, 2000, was maintained by a tax-exempt employer that met specific characteristics. A CSEC plan, as defined in IRC Section 414(y), is not permitted to include the benefit restrictions of IRC Section 436. (Added March 2021)

Temporary relief from the physical presence requirement for spousal consents under qualified retirement plans (Notice 2020-42). This notice provides that, in the case of a participant election witnessed by a notary public or plan representative, for the period beginning January 1, 2020, through December 31, 2020, the physical presence requirement in Treasury Regs. Section 1.401(a)-21(d)(6) is deemed satisfied for an electronic system that satisfies the requirements in Part III of the notice. (Added March 2021)

  • Notice 2021-03 extends, from January 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42, from the physical presence requirement in Treasury Regs. Section 1.401(a)-21(d)(6). (Added March 2021)

COVID-19 relief and other guidance on mid-year reductions or suspensions of contributions to safe harbor IRC Section 401(k) and IRC Section 401(m) plans (Notice 2020-52). This notice clarifies the requirements that apply to a mid-year amendment to a safe harbor IRC Section 401(k) or IRC Section 401(m) plan that reduces only contributions made on behalf of highly compensated employees, as defined in IRC Section 414(q). This notice also provides temporary relief in connection with the Coronavirus Disease 2019 pandemic from certain requirements that would otherwise apply to a mid-year amendment to a safe harbor IRC Section 401(k) or IRC Section 401(m) plan adopted between March 13, 2020, and August 31, 2020, that reduces or suspends safe harbor contributions. (Added March 2021)

Temporary rule preventing partial plan termination (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 209). This section of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides that a plan will not be treated as having a partial termination (within the meaning of IRC Section 411(d)(3)) during any plan year that includes the period beginning March 13, 2020, and ending March 31, 2021, if the number of active participants covered by the plan on March 31, 2021, is at least 80 percent of the number of active participants covered by the plan on March 13, 2020. (Added March 2021)

Special disaster-related rules for use of retirement funds (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 302). This section of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides that a plan may offer participants affected by major disasters declared during the period beginning January 1, 2020, and ending February 25, 2021, (a) new distribution options for "qualified disaster distributions," which are provided special tax treatment and recontribution options; (b) suspensions of plan loan repayments; and (c) new loans with higher maximum dollar limits. To take advantage of the options provided under this legislation, the distributions must be made within the period beginning the first day of an incident period for a qualified disaster and ending June 24, 2021, and the new loans must be made within the period beginning December 27, 2020, and ending June 24, 2021. Plans may also allow repayment of withdrawals made for the purchase or construction of a principal home that was not purchased or constructed because of a disaster. These options do not apply to disasters declared only by reason of COVID-19. If the plan makes such distributions or loans, any necessary retroactive amendments implementing the special rules must be adopted on or before the last day of the first plan year beginning on or after January 1, 2022 (or for IRC Section 414(d) governmental plans, on or before the last day of the first plan year beginning on or after January 1, 2024), and, for an amendment with a retroactive effective date, the plan must be operated as if the amendment were in effect. (Added March 2021)

Effective in 2019

Qualified employer plans prohibited from making loans through credit cards and other similar arrangements (SECURE Act, Section 108). This section of the SECURE Act modifies IRC Section 72(p) by prohibiting loans through credit cards and other similar arrangements. The amendments made by Section 108 apply to loans made after December 20, 2019 (the date of enactment of the Act). (Added May 2020)

Note: In order to avoid a plan operational failure, It is recommended that plan sponsors remove, by the deadline under SECURE Act Section 601, plan language that provides for making loans through credit cards or any other similar arrangement. (Added March 2021).

Automatic extension of filing deadlines in case of certain taxpayers affected by federally declared disasters (Taxpayer Certainty and Disaster Tax Relief Act of 2019, Section 205). This section of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 amends IRC Section 7508A to provide certain taxpayers affected by a federally declared disaster with a 60-day extension for performing certain acts. For retirement plans, the extension applies to the time for making deductible contributions and for completing rollovers. The amendment made by Section 205 applies to federally declared disasters declared after December 20, 2019 (the date of enactment of the Act). (Added May 2020)

Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111). See SECURE Act Section 111 with respect to IRC Section 403(b)(9) qualified church-controlled organizations in items "Effective in 2020." (Added May 2020)

Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116). See SECURE Act Section 116 with respect to a qualified foster care payment that is a difficulty of care payment in items "Effective in 2020." (Added May 2020)

Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205). See SECURE Act Section 205 with respect to modification of nondiscrimination rules to protect older, longer service participants in items "Effective in 2020." (Added May 2020)

Special disaster-related rules for use of retirement funds (Taxpayer Certainty and Disaster Tax Relief Act of 2019, Section 202). See the Taxpayer Certainty and Disaster Tax Relief Act of 2019 Section 202 with respect to special disaster-related rules related to the use of retirement funds in items "Effective in 2020." (Added May 2020)

Changes Relating to Hardship Distributions.

  • Bipartisan Budget Act of 2018, Sections 41113 and 41114. These sections of this act (a) provide that a distribution will not fail to be treated as made on account of hardship merely because the employee does not take any available loan from the plan, and (b) expand the types of contributions and earnings a plan may make available for hardship distributions. In addition, this legislation directs the IRS and Treasury to eliminate the safe harbor requirement to suspend participant contributions for six months in order for the distribution to be deemed necessary to satisfy an immediate and heavy financial need. These changes are effective for plan years beginning after December 31, 2018.
  • Proposed Regulations Regarding Hardship Withdrawals (83 F.R. 56763). The proposed regulations would revise the 401(k) regulations to reflect legislation regarding hardship distributions. The proposed regulations would prohibit a plan from suspending a participant's contributions as a condition of obtaining a hardship distribution. In addition, the proposed regulations would revise the safe harbor list of expenses deemed to constitute an immediate and heavy financial need, including modifications regarding casualty losses and disaster-related expenses. The proposed regulations are generally proposed to be effective for distributions made in plan years beginning after December 31, 2018, but would permit plans to (a) choose to cease suspension of contributions on the first day of the first plan year that begins after December 31, 2018, even for distributions made before that date, and (b) choose to apply the changes to the list of safe harbor expenses to any hardship distribution made after December 31, 2017. In addition, under the proposed regulations the requirement to obtain a representation that a distribution is necessary to satisfy a financial need would only apply for a distribution that is made after 2019, and the prohibition on a plan providing for a suspension of elective contributions or employee contributions as a condition of obtaining a hardship distribution would only apply for a distribution made after 2019.
  • Note: The proposed regulations provide that any plan amendments relating to the final regulations will be treated as integrally related to a disqualifying provision, and will therefore have the same amendment deadline as a disqualifying provision, as set forth in Rev. Proc. 2016-37. For example, for an individually designed plan that is not an IRC Section 414(d) governmental plan, any plan amendments relating to the final regulations must be made by the end of the second calendar year that begins after the issuance of an annual Required Amendments List that includes the final regulations.
  • Note: Taxpayers may rely on the proposed regulations until the date of publication of final regulations in the Federal Register.
  • Relief for Victims of Hurricanes Florence and Michael (83 F.R. 56766). The IRS and Treasury extended the retirement plan relief provided under Announcement 2017–15 to similarly situated victims of Hurricanes Florence and Michael, except that the ''Incident Dates'' (as defined in that announcement) are as specified by FEMA for these 2018 hurricanes, relief is provided through March 15, 2019, and any necessary amendments must be made no later than the deadline for amending a disqualifying provision, as set forth in Rev. Proc. 2016–37.

Extension of temporary nondiscrimination relief for closed defined benefit pension plans (Notice 2018-69). This notice extends, to plan years beginning before 2020, the relief provided to closed defined benefit plans under Notice 2014-5, as extended under Notice 2015-28, Notice 2016-57, and Notice 2017-45.

Minimum age for distributions during working retirement (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 208). See Taxpayer Certainty and Disaster Tax Relief Act of 2020 Section 208 in items "Effective in 2020" with respect to in-service distributions from certain multiemployer plans that cover certain workers in the building and construction industry. (Added March 2021)

Effective in 2018

Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111). See SECURE Act Section 111 with respect to IRC Section 403(b)(9) qualified church-controlled organizations in items "Effective in 2020." (Added May 2020)

Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116). See SECURE Act Section 116 with respect to a qualified foster care payment that is a difficulty of care payment in items "Effective in 2020." (Added May 2020)

Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205). See SECURE Act Section 205 with respect to modification of nondiscrimination rules to protect older, longer service participants in items "Effective in 2020." (Added May 2020)

Special disaster-related rules for use of retirement funds (Taxpayer Certainty and Disaster Tax Relief Act of 2019, Section 202). See the Taxpayer Certainty and Disaster Tax Relief Act of 2019 Section 202 with respect to special disaster-related rules related to the use of retirement funds in items "Effective in 2020." (Added May 2020)

Relief from the once-in-always-in condition for excluding part-time employees from making § 403(b) plan elective deferrals (Notice 2018-95). This notice provides transition relief (both for plan operations and plan language) from the "once-in-always-in" (OIAI) condition for excluding part-time employees under Treasury Regs. Section 1.403(b)-5(b)(4)(iii)(B). In addition, in applying the OIAI exclusion condition for exclusion years after the transition relief ends, this notice provides a fresh-start opportunity for plans. The relief period begins with taxable years beginning after December 31, 2008. For plans with exclusion years based on plan years, the relief period ends for all employees on the last day of the last exclusion year that ends before December 31, 2019. For plans with exclusion years based on employee anniversary years, the relief period ends, with respect to any employee, on the last day of that employee's last exclusion year that ends before December 31, 2019. (Added May 2020)

Final QNEC and QMAC Regulations (T.D. 9835). These regulations provide that employer contributions to a 401(k) plan can be qualified nonelective contributions or qualified matching contributions if they satisfy the applicable nonforfeitability requirements and distribution limitations at the time they are allocated to participants' accounts. Accordingly, these regulations permit forfeitures to be used to fund qualified nonelective contributions and qualified matching contributions. The regulations apply to plan years beginning on or after July 20, 2018, but taxpayers may apply these regulations to earlier periods.

Relief for California Wildfires (Bipartisan Budget Act of 2018, Section 20102). A plan may offer participants affected by the California wildfires (a) new distribution options for "qualified wildfire distributions," which are provided special tax treatment and recontribution options, and (b) plan loans of up to $100,000, subject to special repayment rules. To take advantage of the options provided under this legislation, the loans or distributions must be made within a specified time frame ending December 31, 2018. If the plan makes such loans or distributions, any necessary retroactive amendments implementing the special rules must be adopted on or before the last day of the first plan year beginning on or after January 1, 2019 (or for IRC Section 414(d) governmental plans, the last day of the first plan year beginning on or after January 1, 2021). See, Pub. 976 for more information.

Extension of temporary nondiscrimination relief for closed defined benefit pension plans (Notice 2017-45). This notice extends, to plan years beginning before 2019, the relief provided to closed defined benefit plans under Notice 2014-5, as extended under Notice 2015-28 and Notice 2016-57. See also, Notice 2018-69

Extended rollover periods for certain amounts. Recent legislation extended the deadline for individuals to roll over certain distributions from qualified retirement plans. A plan that accepts rollovers may choose to permit rollover contributions made within the new extended deadlines. The new rules extend the rollover deadline for:

  • Qualified plan loan offset amounts (Tax Cuts and Jobs Act of 2017, Section 13613). Qualified plan loan offset amounts (as defined in IRC Section 402(c)(3)(C)(ii)) may be rolled over by the due date (including extensions) for filing the tax return for the taxable year in which such amount is treated as distributed from a qualified employer plan. (Qualified plan loan offsets include only certain offsets made upon separation of service or termination of the plan.) The extended due date applies to qualified plan loan offset amounts which are treated as distributed in taxable years beginning after December 31, 2017. See, IRC Section 402(c)(3)(C).
  • Refunds of improper tax levies (Bipartisan Budget Act of 2018, Section 41104). A plan may choose to permit participants whose account or benefit under the plan had been subject to an improper federal tax levy to roll over to the plan any refund of such levy (including interest) that the participant subsequently receives from the IRS, no later than the due date (not including extensions) for filing the participant's tax return for the taxable year in which the refund is received. These rules apply to levy refunds received in taxable years beginning after December 31, 2017. See, IRC Section 6343(f).

Modification of deduction for personal casualty losses (Tax Cuts and Jobs Act, Section 11044). Under IRC Section 165(h)(5), for taxable years 2018 through 2025, the deduction for a personal casualty loss generally is available only to the extent the loss is attributable to a federally declared disaster (as defined in IRC Section 165(h)(5)). However, see proposed Treasury Regs. Section 1.401(k)-1(d)(3)(ii)(B)(6) (related to deemed immediate and heavy financial need), which provide, in part, that expenses for the repair of damage to an employee's principal residence that would qualify for the IRC Section 165 casualty deduction is determined without regard to IRC Section 165(h). Thus, for example, a plan that made hardship distributions relating to casualty losses deductible under IRC Section 165 without regard to the changes made to IRC Section 165 by this legislation may be amended to apply the revised safe harbor expense relating to casualty losses to distributions made in 2018 so that plan provisions will conform to the plan's operation. Taxpayers may rely on the proposed regulations until the date of publication of final regulations in the Federal Register.

Minimum age for distributions during working retirement (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 208). See Taxpayer Certainty and Disaster Tax Relief Act of 2020 Section 208 in items "Effective in 2020" with respect to in-service distributions from certain multiemployer plans that cover certain workers in the building and construction industry. (Added March 2021)

Effective in 2017

Relief from the once-in-always-in condition for excluding part-time employees from making § 403(b) plan elective deferrals (Notice 2018-95). See Notice 2018-95 with respect to the once-in-always-in condition for excluding part-time employees from making IRC Section 403(b) plan elective deferrals in items "Effective in 2018." (Added May 2020)

Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111). See SECURE Act Section 111 with respect to IRC Section 403(b)(9) qualified church-controlled organizations in items "Effective in 2020." (Added May 2020)

Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116). See SECURE Act Section 116 with respect to a qualified foster care payment that is a difficulty of care payment in items "Effective in 2020." (Added May 2020)

Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205). See SECURE Act Section 205 with respect to modification of nondiscrimination rules to protect older, longer service participants in items "Effective in 2020." (Added May 2020)

Relief for 2016 Disaster Areas (Tax Cuts and Jobs Act of 2017, Section 11028). Plans may offer participants affected by 2016 disasters "qualified 2016 disaster distributions," subject to special tax treatment and recontribution options. Any qualified 2016 disaster distributions under this legislation must have been made on or after January 1, 2016, and before January 1, 2018. If the plan made such distributions, any necessary retroactive amendments must be adopted on or before the last day of the first plan year beginning on or after January 1, 2018 (or for IRC Section 414(d) governmental plans, the last day of the first plan year beginning on or after January 1, 2020).

Relief for plans that make loans and hardship distributions to victims of Hurricanes Harvey, Irma, and Maria and of the California wildfires (Announcement 2017-11, Announcement 2017-13, Announcement 2017-15). These announcements provide relief from certain requirements for loans and hardship distributions to victims of Hurricanes Harvey, Irma, and Maria, and to victims of the California wildfires, if certain conditions are met.

  • Note: To make a loan or hardship distribution pursuant to the relief provided in these announcements, a plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2017, and other conditions must be met.

New "qualified hurricane distributions" and increased plan loan limits permitted for victims of Hurricanes Harvey, Irma, and Maria (Disaster Tax Relief and Airport and Airway Extension Act of 2017, Section 502, as amended by the Bipartisan Budget Act of 2018, Section 20201(a)). A plan may offer participants affected by Hurricanes Harvey, Irma, and Maria (a) new "qualified hurricane distributions," subject to special tax treatment and recontribution options, and (b) plan loans of up to $100,000, subject to special repayment rules. To take advantage of the options provided under this legislation, the loans or qualified hurricane distributions must be made within a specific time frame ending December 31, 2018.

  • Note: Plans that choose to offer the expanded distributions and/or loans permitted by this legislation must be amended to include the relevant provisions by the last day of the first plan year beginning on or after January 1, 2019 (or for IRC Section 414(d) governmental plans the last day of the first plan year beginning on or after January 1, 2021), and other conditions must be met. 

Proposed Regulations regarding QNECs and QMACs in defined contribution plans (REG-131643-15). These proposed regulations provide that qualified matching contributions and qualified nonelective contributions must satisfy applicable nonforfeitability and distribution requirements at the time they are allocated to participants' accounts but need not meet these requirements when they are contributed to the plan. These proposed regulations apply only to taxable years beginning on or after the publication of final regulations. Taxpayers were permitted to rely on the proposed regulations (including for periods prior to the issuance of the proposed regulations.)

Extension of temporary nondiscrimination relief for closed defined benefit pension plans (Notice 2016-57). This notice extends, to plan years beginning before 2018, the relief provided to closed defined benefit plans under Notice 2014-5, as extended under Notice 2015-28. Also see, Notice 2018-69.

Final regulations regarding partial annuity distribution options for defined benefit pension plans (T.D. 9783). 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 IRC Section 417(e) regulations. Treasury Regs. Section 1.417(e)-1(d)(7) provides rules under which the minimum present value rules of IRC Section 417(e)(3) apply to the distribution of only a portion of a participant's accrued benefit. Treasury Regs. 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 Treasury Regs. Section 1.417(e)-1(d)(7) with respect to any earlier period.

Note: The regulations provide relief from the anti-cutback rules of IRC Section 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 regulations are provided in Notice 2017-44.

Final regulations regarding cash balance/hybrid plans (T.D. 9693 and T.D. 9783). Cash balance/hybrid plans must be amended to the extent necessary to comply with those portions of the regulations that first become applicable to the plan for the plan year beginning in 2017. (Treasury Regs. Section 1.411(b)(5)-1(f)(2)(i)(B)(3) provides an extended applicability date for certain collectively bargained plans; specifically, the applicability of the provisions referenced in Treasury Regs. Section 1.411(b)(5)-1(f)(2)(i)(B)(1) is extended to 2018 or 2019 for these plans.)

  • Note: The relief from the anti-cutback requirements of IRC Section 411(d)(6) provided in Treas. Regs. Section 1.411(b)(5)-1(e)(3)(vi) applies only to plan amendments that are adopted before the effective date of these regulations.
  • Also see, Notice 2016-67. This notice addresses the applicability of the market rate of return rules to implicit interest pension equity plans.

Application of benefit restrictions for certain defined benefit plans (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 IRC Section 436 for the 2016 plan year under Section 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 Certain Cooperative and Small Employer Charity Pension Plan (CSEC plan) as defined in IRC Section 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.

Minimum age for distributions during working retirement (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 208). See Taxpayer Certainty and Disaster Tax Relief Act of 2020 Section 208 in items "Effective in 2020" with respect to in-service distributions from certain multiemployer plans that cover certain workers in the building and construction industry. (Added March 2021)

Effective in 2016

Relief from the once-in-always-in condition for excluding part-time employees from making § 403(b) plan elective deferrals (Notice 2018-95). See Notice 2018-95 with respect to the once-in-always-in condition for excluding part-time employees from making IRC Section 403(b) plan elective deferrals in items "Effective in 2018." (Added May 2020)

Employees of church-controlled organizations participating in section 403(b)(9) retirement income accounts (SECURE Act, Section 111). See SECURE Act Section 111 with respect to IRC Section 403(b)(9) qualified church-controlled organizations in items "Effective in 2020." (Added May 2020)

Difficulty of care payments treated as compensation for retirement contribution limitations (SECURE Act, Section 116). See SECURE Act Section 116 with respect to a qualified foster care payment that is a difficulty of care payment in items "Effective in 2020." (Added May 2020)

Modification of nondiscrimination rules to protect older, longer service participants (SECURE Act, Section 205). See SECURE Act Section 205 with respect to modification of nondiscrimination rules to protect older, longer service participants in items "Effective in 2020." (Added May 2020)

Relief for plans that make loans and hardship distributions to victims of Hurricane Matthew (Announcement 2016-39). This announcement provides relief from certain requirements for loans and hardship distributions to victims of Hurricane Matthew if certain conditions are met.

  • Note: To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016, and other conditions must be met.

Relief for plans that make loans and hardship distributions to victims of the Louisiana Storms (Announcement 2016-30). This announcement provides relief from certain requirements for loans and hardship distributions to victims of the Louisiana Storms if certain conditions are met.

  • Note: To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016, and other conditions must be met.

Mid-year changes to safe harbor 401(k) plans (Notice 2016-16). This notice permits mid-year changes to safe harbor 401(k) plans under certain circumstances.

Proposed regulations regarding nondiscrimination testing under section 401(a)(4) (REG-125761-14, as modified by Announcement 2016-16, which announced that the IRS will withdraw some portions of the proposed regulations). These proposed regulations propose changes to the nondiscrimination testing requirements (generally relating to testing contributions or benefits for a grandfathered group of employees with respect to a closed defined benefit plan.) Plan sponsors may choose to rely on the proposed regulations.

Proposed regulations regarding normal retirement age for governmental pension plans (REG-147310-12). These proposed regulations provide safe harbors and other rules regarding normal retirement age under an IRC Section 414(d) governmental pension plan. These regulations are proposed to be effective for employees hired during plan years beginning on or after the later of (1) January 1, 2017, or (2) the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date that is three months after the final regulations are published in the Federal Register. However, employers may choose to rely on these proposed regulations currently and for prior periods.

Extension of temporary nondiscrimination relief for closed defined benefit plans (Notice 2015-28). This notice extends the temporary nondiscrimination relief provided to closed defined benefit plans under Notice 2014-5, to plan years beginning before 2017. (Notice 2014-5 provides alternative nondiscrimination testing methods that sponsors of closed defined benefit plans may choose to use.) Also see, Notice 2018-69.

Restrictions on distributions in bankruptcy for collectively-bargained single-employer defined benefit plans (Highway and Transportation Funding Act of 2014 PDF, Section 2003). Single-employer defined benefit plans may not use the adjustment of segment rates under IRC Section 430(h)(2)(C)(iv) in determining the plan's adjusted funding attainment percentage for purposes of the restrictions on accelerated distributions in employer bankruptcy under IRC Section 436. For collectively-bargained plans, this rule is effective for plan years beginning after December 31, 2015.

Minimum age for distributions during working retirement (Taxpayer Certainty and Disaster Tax Relief Act of 2020, Section 208). See Taxpayer Certainty and Disaster Tax Relief Act of 2020 Section 208 in items "Effective in 2020" with respect to in-service distributions from certain multiemployer plans that cover certain workers in the building and construction industry. (Added March 2021)