The Operational Compliance List ("OC" List) is provided per Rev. Proc. 2016-37, Section 10, to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification 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 contain other significant guidance that affects daily plan operations.
- Is available on this webpage only; it won’t be 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. However, 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. For a complete list of IRS guidance, see Recent Published Guidance.
Note: In order to be qualified, a plan must comply operationally with each relevant qualification requirement, even if the requirement is not included on the OC List. A plan must be operated in compliance with a change in qualification requirements from the effective date of the change.
Effective in 2017
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, but taxpayers may choose to rely on these proposed regulations currently and for prior periods.
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.
Final regulations regarding partial annuity distribution options for defined benefit pension plans (T.D. 9783). These regulations, which apply to defined benefit plans that permit partial annuity distributions, modify the minimum present value requirements under Internal Revenue Code (“IRC”) Section 417(e) for such distributions. These regulations apply to distributions with annuity starting dates in plan years beginning on or after January 1, 2017. A taxpayer can elect to apply these regulations 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.
Final regulations regarding cash balance/hybrid plans (T.D. 9693 and T.D. 9743). These regulations, which apply to cash balance/hybrid plans (other than collectively bargained plans with a delayed effective date pursuant to Treas. Regs. Section 1.411(b)(5)-1(f)(2)(B)(3)), provide rules regarding market rate of return and other requirements for cash balance/hybrid plans. The regulations generally are first effective for plan years beginning on or after January 1, 2017.
- 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, this rule does not apply to 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), unless the plan sponsor has made an election for the plan not to be treated as a CSEC plan.
Effective in 2016
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.
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.
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.)
Restrictions on distributions in bankruptcy for collectively-bargained single-employer defined benefit plans (Highway and Transportation Funding Act of 2014, Section 2003). This Act provides that 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.