SECTION 5. EXCEPTIONS TO THE

GENERAL RULE FOR DETERMINING A PLAN’S FIVE-YEAR REMEDIAL AMENDMENT CYCLE

.01 The following rules apply to determine the five-year remedial amendment cycle of plans maintained by more than one employer and plans maintained by employers that are part of a controlled group under § 414(b) or (c) or an affiliated service group under § 414(m).

.02 For plans that are maintained by more than one employer (that is, multiemployer and multiple employer plans), the plan’s five-year remedial amendment cycle is Cycle A.

.03 For plans maintained by multiple members of a controlled group under § 414(b) or (c) or an affiliated service group under § 414(m), the plan’s five year remedial amendment cycle is determined with reference to the last digit of the TIN

that is or will be used to report the plan on Form 5500, Annual Return/Report of Em- ployee Benefit Plan . However, see section 5.04, regarding the permitted election of a different cycle.

.04 In the case of a controlled group under § 414(b) or (c) or an affiliated service group under § 414(m), an election may be made that the five-year remedial amendment cycle for all plans maintained by any members of the group (other than multiemployer plans or multiple employer plans) will be Cycle A, or, in the case of a parent-subsidiary organization, the cycle determined by reference to the TIN of the parent. This election is to be made by the parent, in the case of a parent-subsidiary organization, or jointly by all members of the controlled or affiliated service group, in the case of any other organization. The election must list all members of the group, including each member’s TIN, and all plans (other than multiemployer plans and multiple employer plans) that are maintained by each member of the group. The election is to be filed with the first determination letter application that is submitted in accordance with this revenue procedure for any plan

October 4, 2004 574 2004–40 I.R.B.

.02 The remedial amendment period for a disqualifying provision described in § 1.401(b)–1(b)(1) is extended to the end of the plan’s five-year remedial amendment cycle in which the remedial amendment period with respect to the disqualifying provision would otherwise end.

For the following examples, please refer to the chart found in section 9.01.

Example 1: The last digit of Employer A’s TIN is 7. Employer A adopts a new plan, Plan X on January 1, 2006. The cycle for Plan X is Cycle B. The tax year of Employer A and the plan year of Plan X is the calendar year. Under § 1.401(b)–1 of the regulations, the initial remedial amendment period (RAP) would end on the later of the due date (including extensions) for filing Employer A’s tax return for the taxable year in which Plan X is put into effect or the last day of the plan year in which Plan X is put into effect (that is, 2006). The initial RAP is extended to the end of the 5-year RAP cycle in which the RAP would have otherwise ended under § 1.401(b)–1. The initial RAP for Plan X therefore ends January 31, 2008. Any retroactive remedial amendments required for Plan X including EGTRRA amendments must be adopted by January 31, 2008, unless an application for a determination letter is submitted by that date. The plan would be retroactively effective to the first day Employer A adopted Plan X in 2006. The subsequent 5-year RAP cycles end on January 31, 2013, January 31, 2018, etc.

Example 2: Same facts as Example 1, except that Employer A, a C corporation, later adopts a discretionary plan amendment to Plan X that is both adopted and effective on January 1, 2013. The amendment results in a disqualifying provision. The RAP under § 1.401(b)–1 would end on the later of the due date for filing Employer A’s tax return (including extensions) for the taxable year in which the amendment is adopted or effective (whichever is later) or the last day of the plan year in which the amendment is adopted or effective (whichever is later), that is, the later of December 31, 2013, or March 15, 2014, (assuming no extensions are secured). The RAP is extended to the end of the 5-year RAP cycle which includes the date of the end of the RAP under § 1.401(b)–1. Therefore, Employer A would be required to adopt an amendment which corrected the disqualifying provision by January 31, 2018, but the amendment would be retroactively effective to the beginning of the RAP (that is, January 1, 2013). .03 The remedial amendment period for a disqualifying provision described in § 1.401(b)–1(b)(3) is extended to the end of the plan’s first five-year remedial amendment cycle ending at least twelve months after the applicable change in the qualification requirements of the Code is first listed in the Service’s Cumulative List of Changes in Plan Qualification Requirements. See section 10 for more information regarding this list.

.04 Except as otherwise required, the time by which a plan must be amended for

pre-merger five-year remedial amendment cycle of any of the plans that have merged.

(2) If a plan of an employer is acquired by another employer, the five-year remedial amendment cycle of the plan is thereafter determined as provided in sections 4 and 5 on the basis of the TIN, controlled group status, affiliated service group status, etc., of the employer that has acquired the plan, regardless of whether this would shorten or extend the pre-acquisition five-year remedial amendment cycle of the plan.

(3) If there is a change in the TIN, controlled group status, affiliated service group status, etc., of the employer that maintains a plan, the five-year remedial amendment cycle of the plan is thereafter determined as provided in sections 4 and 5 on the basis of the changed TIN, controlled group status, affiliated service group status, etc., of the employer, regardless of whether this would shorten or extend the five-year remedial amendment cycle of the plan. The change could result in the need to file a new election pursuant to section 5.04. (4) If a portion of a plan is spun off, the five-year remedial amendment cycle of the spun-off plan is determined as provided in sections 4 and 5 on the basis of the TIN, controlled group status, affiliated service group status, etc., of the employer that maintains the spun-off plan, regardless of whether this would shorten or extend the five-year remedial amendment cycle of the plan.

.02 If, as a result of one of the transactions described in this section, a plan’s current five-year remedial amendment cycle is shortened such that the period remaining in the cycle following the transaction is less than twelve calendar months, the plan’s current cycle will be extended for twelve months and the next five-year cycle would be shortened accordingly. Thereafter, the plan’s five-year remedial amendment cycles will be determined as provided in section 6.01. This extension does not apply to other plans of the employer that are not similarly affected.