SECTION 2. BACKGROUND

.01 Section 401(b) of the Code provides a remedial amendment period during

which a plan may be amended retroactively to comply with the Code’s qualification requirements. Section 1.401(b)–1 of the Income Tax Regulations describes the disqualifying provisions that may be amended retroactively and the remedial amendment period during which retroactive amendments may be adopted. The regulations also grant the Commissioner the discretion to designate certain plan provisions as disqualifying provisions and to extend the remedial amendment period.

.02 Section 1.401(b)–1 provides that a plan that fails to satisfy the requirements of § 401(a) solely as a result of a disqualifying provision defined under § 1.401(b)–1(b) need not be amended to comply with those requirements until the last day of the remedial amendment period with respect to the disqualifying provision, provided the amendment is made retroactively effective to the beginning of the remedial amendment period. Under § 1.401(b)–1(b)(1), a disqualifying provision includes a provision of a new plan, the absence of a provision from a new plan, or an amendment to an existing plan which causes the plan to fail to satisfy the requirements of the Code applicable to the qualification of the plan as of the date the plan or amendment is first made effective. Under § 1.401(b)–1(b)(3), a disqualifying provision includes a plan provision designated, at the Commissioner’s discretion, as a disqualifying provision that either (i) results in the failure of the plan to satisfy the qualification requirements of the Code by reason of a change in those requirements; or (ii) is integral to a qualification requirement of the Code that has been changed. For this purpose § 1.401(b)–1(c)(1) provides that a disqualifying provision includes the absence from a plan of a provision required by or, if applicable, integral to the applicable change in the qualification requirements of the Code, if the plan was in effect on the date the change in those requirements became effective with respect to the plan. Under § 1.401(b)–1(c)(3), the Commissioner

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may impose limits and provide additional rules regarding the amendments that may be made with respect to disqualifying provisions described in § 1.401(b)–1(b)(3).

.03 For a disqualifying provision of a new plan described in § 1.401(b)–1(b)(1), the remedial amendment period begins on the date the plan is put into effect and, in the case of a plan maintained by one employer, ends on the later of the due date (including extensions) for filing the employer’s tax return for the taxable year in which the plan is put into effect or the last day of the plan year in which the plan is put into effect. A new plan maintained by more than one employer need not be amended until the last day of the tenth month following the last day of the plan year that includes the date the plan is put into effect.

.04 For a disqualifying provision that is an amendment to an existing plan described in § 1.401(b)–1(b)(1), the remedial amendment period begins on the earlier of the date the plan amendment is adopted or put into effect and, in the case of a plan maintained by one employer, ends on the later of the due date for filing the employer’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). In the case of an amendment to an existing plan maintained by more than one employer, the plan need not be amended until the last day of the tenth month following the last day of the plan year in which the amendment is adopted or effective (whichever is later).

.05 For a disqualifying provision described in § 1.401(b)–1(b)(3), the remedial amendment period begins on the date on which the change becomes effective with respect to the plan or, in the case of a provision that is integral to a qualification requirement that has been changed, the first day on which the plan is operated in accordance with the provision as amended. In the case of a plan maintained by one employer, the remedial amendment period

for a disqualifying provision described in § 1.401(b)–1(b)(3) ends on the later of: (1) the due date (including extensions) for filing the income tax return for the employer’s taxable year that includes the date on which the remedial amendment period begins or (2) the last day of the plan year that includes the date on which the remedial amendment period begins. A plan maintained by more than one employer need not be amended until the last day of the tenth month following the last day of the plan year in which the remedial amendment period begins.

.06 Section 1.401(b)–1(f) provides that the Commissioner may extend the remedial amendment period at his discretion.

.07 Notice 2001–42, 2001–2 C.B. 70, provided a remedial amendment period under § 401(b), ending no earlier than the end of the 2005 plan year, in which any needed retroactive remedial plan amendments for EGTRRA must be adopted (the EGTRRA remedial amendment period). The availability of the EGTRRA remedial amendment period was conditioned on the timely adoption of required good faith EGTRRA plan amendments. In general, a good faith EGTRRA plan amendment is adopted timely if it is adopted by the later of the end of the plan year that includes the effective date of the EGTRRA change or the end of the plan’s GUST remedial amendment period. ¹ However, an employer’s ability to rely on a favorable determination letter will not be adversely affected by the timely adoption of good faith EGTRRA plan amendments.

.08 The end of the EGTRRA remedial amendment period is also the last day on which retroactive remedial amendments may be adopted with respect to the requirements of the final regulations under § 401(a)(9) of the Code (required minimum distributions), Rev. Rul. 2001–62, 2001–2 C.B. 632 (applicable mortality table), and Rev. Rul. 2002–27, 2002–1 C.B. 925 (deemed § 125 compensation). Except with respect to the requirements of the final § 401(a)(9) regulations for defined benefit plans, the availability of the

remedial amendment period with respect to these three requirements is conditioned on the adoption of plan amendments by the time specified in the applicable guidance (or, in the case of the final § 401(a)(9) regulations published on April 17, 2002 with respect to defined contribution plans, in Rev. Proc. 2002–29, 2002–1 C.B. 1176, as modified by Rev. Proc. 2003–10, 2003–1 C.B. 259). .09 Rev. Proc. 2004–25, 2004–1 C.B. 791, extended the remedial amendment period with respect to disqualifying provisions described in § 1.401(b)–1(b)(1) that are put into effect (in the case of new plans) or adopted (in the case of existing plans) after December 31, 2001, to the end of the EGTRRA remedial amendment period. The effect of Rev. Proc. 2004–25 is to ensure that plan sponsors do not need to apply for more than one determination letter during the EGTRRA remedial amendment period simply because they have put a plan into effect or adopted voluntary plan amendments after December 31, 2001. The revenue procedure did not extend any other existing plan amendment or determination letter submission deadlines, such as the deadline for adoption of good faith plan amendments for EGTRRA or the final § 401(a)(9) regulations.

.10 In Notice 2004–84, 2004–2 C.B. 1030, the Service published the 2004 Cumulative List of Changes in Plan Qualification Requirements which contains qualification requirements for defined contribution pre-approved plans to be used for their first submission under the six-year remedial amendment cycle.

.11 In Rev. Proc. 2005–16, 2005–1 C.B. 674, the Service announced the opening of the initial six-year remedial amendment cycle for defined contribution pre-approved plans. As of February 17, 2005, the Service began to accept applications for opinion and advisory letters for defined contribution pre-approved plans which take into account the qualification requirements set forth in the 2004 Cumulative List. The revenue procedure also

1 The term “GUST” refers to the following:

• the Uruguay Round Agreements Act, Pub. L. 103–465;

• the Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L. 103–353;

• the Small Business Job Protection Act of 1996, Pub. L. 104–188;

• the Taxpayer Relief Act of 1997, Pub. L. 105–34;

• the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105–206; and

  • the Community Renewal Tax Relief Act of 2000, Pub. L. 106–554. The GUST remedial amendment period generally ended on the later of February 28, 2002, or the end of a plan’s 2001 plan year. However, for certain plans eligible for an extended GUST remedial amendment period under Rev. Proc. 2000–20, 2000–1 C.B. 553, the period generally ended on September 30, 2003.

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contains the rules for issuing opinion and advisory letters for pre-approved plans.

.12 In Announcement 2005–36, 2005–1 C.B. 1095, the Service announced the submission deadline for sponsors and practitioners maintaining defined contribution mass submitter and national sponsor plans for the initial six-year remedial amendment cycle is October 31, 2005.

.13 In Rev. Proc. 2005–66, 2005–2 C.B. 509, the Service established a system of cyclical remedial amendment periods for qualified plans as described in section 1.01 above, and provided deadlines for the timely adoption of interim or discretionary amendments to plans in section 5.05.

(1) Plan sponsors or practitioners maintaining defined contribution non-mass submitter plans, as well as word-for-word identical adopters and minor modifiers, had until January 31, 2006, the end of the initial applicable remedial amendment cycle submission period (as stated in section 23 of Rev. Proc. 2005–16, 2005–1 C.B. 674), to submit their M&P and volume submitter plans for review, taking into account the requirements of EGTRRA and other items identified on the 2004 Cumulative List. Rev. Proc. 2005–66 also extended the deadline from October 31, 2005 to January 31, 2006, for sponsors and practitioners maintaining defined contribution mass submitter plans and national sponsor plans.

(2) The determination letter program for the initial remedial amendment cycle for some individually designed plans opened on February 1, 2006. On that date, the Service began to accept applications for determination letters for individually designed plans that take into account the requirements of EGTRRA and other items identified on the 2005 Cumulative List.

.14 Notice 2005–95, 2005–2 C.B. 1172, discussed the general timing rules for plan amendments and provides that the deadlines set forth under section 5.05 of Rev. Proc. 2005–66 apply, with certain exceptions. See section 5.07 of this revenue procedure and section V of Notice 2005–95 for a list of specific exceptions. In addition, Notice 2005–95 gave transitional relief to plan sponsors, practitioners and employers, providing them with an extension of the otherwise applicable deadline under section 5.05 of Rev. Proc. 2005–66 for adopting certain plan amendments reflecting the final retroactive annuity starting

date regulations, the automatic rollover requirements under § 401(a)(31)(B), and the final § 401(k) and § 401(m) regulations.

.15 In Notice 2005–101, 2005–2 C.B. 1219, the Service published the 2005 Cumulative List of Changes in Plan Qualification Requirements, which contains qualification requirements for single employer individually designed defined contribution plans (including employee stock ownership plans) and defined benefit plans, to be used primarily by plan sponsors of such plans that fall in Cycle A.

.16 In Rev. Proc. 2006–6, 2006–1 C.B. 204, the Service provided that it would begin to accept applications for determination letters for some individually designed plans (depending on their cycle) that take into account the qualification requirements of the Code as amended by EGTRRA.

.17 In Rev. Proc. 2007–6, 2007–1 I.R.B. 189, the Service published the annual update containing procedures for issuing determination letters on the qualified status of plans.

.18 In Notice 2007–3, 2007–2 I.R.B. 255, the Service published the 2006 Cumulative List of Changes in Plan Qualification Requirements, which contains qualification requirements for defined benefit pre-approved plans for their first submission under the initial six-year remedial amendment cycle, qualification requirements for single employer individually designed defined benefit plans and single employer individually designed defined contribution plans (including employee stock ownership plans), to be used primarily by plan sponsors of such plans that fall in Cycle B, and qualification requirements for plan sponsors of multiple employer plans which are in Cycle B.