SECTION 3. EXTENSION OF

REMEDIAL AMENDMENT PERIOD

.01 The remedial amendment period described in Rev. Proc. 97–41 and Rev. Proc. 98–14, hereafter referred to as the “GUST” remedial amendment period, is, in the case of nongovernmental plans, hereby extended to the last day of the first plan year beginning on or after January 1, 2000. This extension does not alter the GUST remedial amendment period for governmental plans described in Rev. Proc. 98–14.

.02 This extension also applies to the remedial amendment period with respect to disqualifying provisions of new plans adopted or effective after December 7, 1994, and with respect to plan amendments adopted after December 7, 1994, which would cause an existing plan to fail to be qualified.

.03 This extension also extends the deadline for adopting plan amendments

of RRA 98 by no later than the last day of the first plan year beginning after December 31, 1998. Second, the plan provisions, as amended, must be effective as of the first day the plan operates in accordance with the change made by § 6005(c)(2) of RRA 98.

.07 Under § 417(e)(3), as amended by § 767 of the Retirement Protection Act of 1994 (“RPA 94,” which is part of GATT), and § 1.417(e)–1(d), a defined benefit plan must provide that the present value of any accrued benefit and the amount of any distribution must not be less than the amount calculated using the applicable interest rate described in § 1.417(e)–1(d)(3) and the applicable mortality table described in § 1.417(e)–1(d)(2). Prior to amendment by § 767 of RPA 94, § 417(e)(3) required, instead of the applicable interest rate, an interest rate based on the rate that would be used by the Pension Benefit Guaranty Corporation (“PBGC”) for a trusteed single-employer plan to value the participant’s vested benefit (“PBGC rate”), and it did not impose any restrictions on the mortality table to be used. Section 767 of RPA 94 and § 1.417(e)–1(d) are generally effective for distributions with annuity starting dates in plan years beginning after December 31, 1994. However, § 417(e)(3)(B) provides a transition rule for plans adopted and in effect as of December 7, 1994 (“preGATT plans”). In general, under this rule, the present value of a distribution from a pre-GATT plan that is made before the earlier of (i) the first plan year beginning after December 31, 1999, or (ii) the later of the adoption or effective date of a plan amendment applying the changes made to § 417(e)(3) to the plan is to be determined under the plan’s pre-GATT terms. Thus, for pre-GATT plans, amendments applying the changes to § 417(e)(3) to plan years beginning before January 1, 2000, could not be adopted retroactively, and these plans could not be operated in accordance with the changes prior to plan amendment.

.08 Section 767(d)(2) of RPA 94 provides that a participant’s accrued benefit is not considered to be reduced in violation of § 411(d)(6) merely because the benefit is determined in accordance with the applicable interest rate rules and the applicable mortality table rules of § 417(e)(3)(A), as amended by RPA 94.

Section 1.417(e)–1(d)(10) explains the scope of relief from the requirements of § 411(d)(6). A plan amendment to comply with the applicable interest rate rules and the applicable mortality table rules of § 417(e)(3)(A), as amended by RPA 94, must apply to all distributions with annuity starting dates that occur in plan years beginning after December 31, 1999.

.09 Section 1.401(b)–1T(c)(3) authorizes the Commissioner to impose limits and provide additional rules regarding the amendments that may be made within the remedial amendment period with respect to a plan provision that has been designated by the Commissioner as a disqualifying provision under § 401(b).

.10 Under Rev. Proc. 89–9, 1989–1 C.B. 780, Rev. Proc. 89–13, 1989–1 C.B. 801 (both as modified by Rev. Proc. 93–9, 1993–1 C.B. 474), Rev. Proc. 93–39, 1993–2 C.B. 513, Announcement 94–85, 1994–26 I.R.B. 23, and Rev. Proc. 95–12, 1995–1 C.B. 508, plans that were submitted to the Service within certain deadlines for determination, opinion, or notification letters under TRA 86 and received favorable letters are entitled to extended reliance. The sponsor of a plan that is entitled to extended reliance on a favorable TRA 86 letter may rely on that letter until the earlier of the last day of the last plan year commencing prior to January 1, 1999, or the date established for plan amendment by any legislation that is effective after the date of the plan’s letter. A plan with extended reliance must be amended by the last day of the first plan year beginning on or after January 1, 1999, to the extent necessary to comply with regulations or administrative guidance of general applicability that has been issued since the date of the plan’s favorable TRA 86 letter. These amendments must be made effective no later than the first day of the first plan year beginning on or after January 1, 1999, and no earlier than the first day of the plan year in which the amendments are adopted. (But see Rev. Rul. 94–76, 1994–2 C.B. 46, and Rev. Rul. 96–47, 1996–2 C.B. 35.)

.11 For nonelecting church plans, Notice 98–39, 1998–33 I.R.B. 11, extended the remedial amendment period for plan amendments relating to regulations under §§ 401(a)(4), 401(a)(5), 401(l), and 414(s) (“TRA 86 remedial amendment period”) until the last day of the first plan year be

1999–16 I.R.B. 7 April 19, 1999

applying the changes under § 415(b)(2)(E) and the deadline for adopting a plan amendment repealing a pre-August 20, 1996, GATT plan amendment, thereby permitting the earlier plan amendment to be disregarded in applying § 767(d)(3)(A) of GATT, as modified by § 1449(a) of SBJPA.

.04 The deadline, under Notice 98–52, for amending plan provisions that are integral to a qualification requirement changed by a provision of SBJPA that becomes effective on the first day of the first plan year beginning after December 31, 1998, is also extended to the end of the GUST remedial amendment period. In addition, the requirement, under Notice 98–52, that such plan provisions, as amended, must be effective as of the first day of the first plan year beginning after December 31, 1998, is eliminated. Instead, such plan provisions, as amended, must be effective no earlier than the first day of the first plan year beginning after December 31, 1998. Thus, for example, an existing § 401(k) plan may be amended by the last day of the 2000 plan year, retroactive to the first day of that year (or to the first day of the 1999 plan year), to satisfy the safe harbors in § 401(k)(12) and § 401(m)(11) for the 2000 plan year (or for both the 1999 and 2000 plan years). Lastly, Notice 98–52 is modified to provide that a plan amendment that is made within the GUST remedial amendment period will not be treated as violating § 411(d)(6) merely because the plan amendment imposes the withdrawal restrictions required by § 401(k)(12)(E)(i), but only if those withdrawal restrictions do not apply with respect to contributions allocated as of a date before the first day of the first plan year for which the plan satisfies the safe harbor.

.05 The deadline, under Notice 99–5, for amending plan provisions that are integral to the requirements of § 401(a)(31) to reflect the change made by § 6005(c)(2) of RRA 98 is also extended to the end of the GUST remedial amendment period. The requirement, under Notice 99–5, that such plan provisions, as amended, must be effective as of the first day the plan operates in accordance with the change made by § 6005(c)(2) of RRA 98 continues to apply.

.06 Finally, the extension of the remedial amendment period also applies to the

time for adopting amendments of defined benefit plans to provide that benefits will be determined in accordance with the applicable interest rate rules and applicable mortality table rules of § 1.417(e)–1(d). Thus, such a plan amendment may be adopted at any time up to the last day of the extended remedial amendment period, provided the amendment is made effective for distributions with annuity starting dates occurring in plan years beginning after December 31, 1999. However, pursuant to the Commissioner’s authority in §1.401(b)–1T(c)(3), if such a plan amendment is adopted after the last day of the last plan year beginning before January 1, 2000, the amendment must provide that, with respect to distributions with annuity starting dates that are after the last day of that plan year but before the date of adoption of the amendment, the distribution will be the greater of the amount that would be determined under the plan without regard to the amendment and the amount determined under the plan with regard to the amendment.

.07 The TRA 86 remedial amendment period for governmental plans is hereby extended to the end of the GUST remedial amendment period for governmental plans described in Rev. Proc. 98–14, and the TRA 86 remedial amendment period for nonelecting church plans is hereby extended to the last day of the first plan year beginning on or after January 1, 2000. Accordingly, governmental plans need not be amended to comply with TRA 86, UCA, or OBRA 93 (to the extent the provisions of those acts apply) until the date described in Rev. Proc. 98–14. In accordance with Notice 98–39, nonelecting church plans need not be amended to comply with the regulations under §§ 401(a)(4), 401(l), 410(b), or 414(s) until the last day of the first plan year beginning on or after January 1, 2001. For all other applicable provisions of those acts, however, nonelecting church plans must be amended by the last day of the first plan year beginning on or after January 1, 2000. The additional administrative relief provided under Notice 92–36, 1992–2 C.B. 364, continues to be available to governmental and nonelecting church plans through the end of their respective remedial amendment periods with respect to the applicable nondiscrimination requirements.