Part III. Administrative, Procedural, and Miscellaneous

Guidance on the Application of § 409A(a) to Changes to Nonqualified Deferred Compensation Plans to Comply with an Advisory Opinion of the Office of the Special Master for TARP Executive Compensation

Notice 2009–92

I. Introduction

This notice provides that, subject to certain conditions, the compliance by a financial institution (TARP recipient) that has received financial assistance under the Troubled Asset Relief Program (TARP) with an advisory opinion of the Office of the Special Master for TARP Executive Compensation (the Special Master) determining that changing the time or form of payment of compensation to a service provider of the TARP recipient, or conditioning payment upon a TARP-related condition such as the prior repayment of some or all of the financial assistance, or both, is necessary for the payment or arrangement to be consistent with the standards set forth in Treasury’s Interim Final Rule for TARP Compensation and Corporate Governance (74 FR 28394), will not result in a failure to comply with the requirements of § 409A(a) of the Internal Revenue Code (Code). This notice applies only to TARP recipients and the service providers of such TARP recipients and only to the extent that the compensation paid by the TARP recipient to a service provider of that TARP recipient is addressed by an advisory opinion of the Special Master issued after September 30, 2009. The Treasury Department and the IRS intend to amend the regulations under § 409A to incorporate guidance set forth in this notice as necessary.

II. Background

A. Section 409A of the Code

Section 409A prescribes certain requirements applicable to nonqualified deferred compensation plans. If a plan does not meet those requirements, participants in the plan are required to include

in income immediately compensation otherwise deferred under the plan and pay taxes on such income, including an additional 20% tax and a tax generally based upon the underpayment interest that would have accrued had the amount been includible in income when first deferred or, if later, vested. As provided by § 409A(a)(1)(A)(i), a nonqualified deferred compensation plan must comply with the requirements of § 409A(a) both in form and in operation. Section 409A(e) provides that the Secretary of the Treasury (Secretary) shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of § 409A. On April 17, 2007, the Treasury Department and the IRS issued final regulations under § 409A that apply to taxable years beginning on or after January 1, 2009 (72 Fed. Reg. 19234).

Section 409A(a)(4) provides certain rules with respect to making an election to defer compensation under a nonqualified deferred compensation plan. Section 409A(a)(4)(B)(i) provides generally that a plan may permit compensation for services performed during a taxable year to be deferred at the participant’s election only if the election to defer such compensation is made not later than the close of the preceding taxable year or at such other time as is provided in regulations. Section 409A(a)(4)(C) provides that a nonqualified deferred compensation plan that permits, under a subsequent election (a subsequent deferral election), a delay in a payment or a change in the form of payment must require that (i) such election will not take effect until at least 12 months after the date on which the election is made, (ii) in the case of an election related to a payment not made on account of disability, death or the occurrence of an unforeseeable emergency, the payment governed by the election will be deferred for a period of not less than five years from the date the payment would otherwise have been made, and (iii) any election related to a payment to be made at a specified time or pursuant to a fixed schedule will be made not less than 12 months prior to the date of the first scheduled payment.

Section 1.409A–2(b)(7) of the Income Tax Regulations provides that a payment

may be delayed to a date after a designated payment date under certain circumstances, and that in these circumstances the applicable plan provision will not fail to meet the requirements of establishing a permissible payment event and the delay in the payment will not constitute a subsequent deferral election, as long as the service recipient treats all payments to similarly situated service providers on a reasonably consistent basis. Such circumstances include (i) the delay of payments subject to § 162(m) to the extent the service recipient reasonably anticipates that if the payments were made as scheduled, the service recipient’s deduction with respect to such payments would not be permitted due to the application of § 162(m), (ii) the delay of payments to the extent the service recipient reasonably anticipates that making the payments will violate Federal securities laws or other applicable law, and (iii) such other events and conditions as the Commissioner may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

Section 409A(a)(3) provides that, except as provided in regulations issued by the Secretary, a nonqualified deferred compensation plan may not permit the acceleration of the time or schedule of payment of compensation deferred under the plan. Section 1.409A–3(j) further provides that a nonqualified deferred compensation plan may not permit the acceleration of the time or schedule of any payment, and no such accelerated payment may be made whether or not provided for under the terms of the plan, except pursuant to one of the exceptions set forth under such section.

Under § 1.409A–1(b)(4), an amount that constitutes a short-term deferral is not a deferral of compensation for purposes of § 409A. Generally, an amount must be paid not later than the end of the applicable 2 ¹ /2 month period (as defined in § 1.409A–1(b)(4)) in order to qualify as a short-term deferral. The applicable 2 ¹ /2 month period is the period ending on the 15 ^th day of the third month following the later of the end of the service provider’s first taxable year in which the right to payment is no longer subject to a substantial risk of forfeiture or the end of the service

2009–52 I.R.B. 964 December 28, 2009

the compensation structures of any other executive officers of the Exceptional Assistance Recipient, and certain other most highly compensated employees. Section 30.16(a)(3) (Q–16(a)(3)) provides that this determination is based upon whether the compensation structure for the affected employee, including in certain instances the amount payable or potentially payable under such compensation structure, will or may result in payments that are inconsistent with the purposes of section 111 of EESA or TARP, or are otherwise contrary to the public interest. For TARP recipients that are not Exceptional Assistance Recipients and their employees, and for other employees or payments to employees of Exceptional Assistance Recipients (such as payments not subject to section 111 of EESA), section 30.16(a)(4) (Q–16(a)(4)) provides that a TARP recipient or TARP recipient employee may request an advisory opinion from the Special Master as to whether a compensation structure is, or will or may result in payments that are, inconsistent with the purposes of EESA or TARP, or otherwise contrary to the public interest. Section 30.16(a)(4) (Q–16(a)(4)) further provides that the Special Master may render such an advisory opinion at his own initiative. An advisory opinion is not binding upon a TARP recipient receiving the opinion, but, under § 30.16(c)(3) (Q–16(c)(3)), may be relied upon by that TARP recipient and its employees, if that TARP recipient and its employees comply with the advisory opinion in all respects. ¹

D. Interaction Between Advisory Opinions and § 409A

To render a favorable advisory opinion, the Special Master may determine that changes to a compensation arrangement, including the time and form of payment, are necessary for the arrangement, or payments under the arrangement, to be consistent with the purposes of EESA or TARP, and otherwise consistent with the public interest. The Special Master may also determine that to be consistent with the purposes of EESA or TARP, and otherwise consistent with the public interest, a payment must be subject to certain TARP-re

recipient’s first taxable year in which such right is no longer subject to such risk. Under § 1.409A–1(b)(4)(ii), a payment that otherwise qualifies as a short-term deferral but is made after the applicable 2 ¹ /2 month period may continue to so qualify if (i) it was administratively impracticable to make the payment by the end of such period and, as of the date the legally binding right to the compensation arose, such impracticability was unforeseeable, provided that the payment is made as soon as administratively practicable or (ii) making such payment by the end of such period would have jeopardized the ability of the service recipient to continue as a going concern, provided that the payment is made as soon as it would no longer have such effect. In addition, such a payment may continue to so qualify if the service recipient reasonably anticipates that § 162(m) would disallow its deduction for such payment and, at the time the legally binding right to the payment arose, a reasonable person would not have anticipated such disallowance, so long as the payment is made as soon as reasonably practicable following the first date on which the service recipient anticipates or reasonably should anticipate that, if it made the payment on such date, § 162(m) would not limit its ability to deduct the payment.

B. The Troubled Asset Relief Program (TARP)

In October, 2008, the Department of the Treasury (Treasury) established the TARP under the Emergency Economic Stabilization Act of 2008, as amended (12 U.S.C. 5021 et seq. ) (EESA). EESA provided immediate authority and facilities that the Secretary of the Treasury (Secretary) could use to restore liquidity and stability to the financial system. Section 101(a) of EESA authorizes the Secretary to establish the TARP to “purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and policies and procedures developed and published by the Secretary.” Section 101(c) of EESA

authorizes the Secretary to take such actions as the Secretary deems necessary to carry out the authorities in EESA, including without limitation issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities or purposes of EESA.

The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law on February 17, 2009. Title VII of Division B of ARRA amended in its entirety section 111 of EESA. Section 111 of EESA, both as originally promulgated and as amended, provides that certain entities that receive financial assistance from Treasury under the TARP (TARP recipients) will be subject to specified executive compensation and corporate governance standards to be established by the Secretary.

C. The Interim Final Rule and the Office of the Special Master for TARP Executive Compensation

On June 15, 2009, Treasury issued an Interim Final Rule setting forth the rules on executive compensation and corporate governance applicable to TARP recipients (74 FR 28394). The rules apply solely to TARP recipients, as defined in §30.1 (Q–1) of the Interim Final Rule. Section 30.16 (Q–16) of the Interim Final Rule establishes an Office of the Special Master for TARP Executive Compensation (the Special Master). Sections 30.11 and 30.16(a) (Q–11 and Q–16(a)) provide that the Special Master must approve any compensation payments to, and the compensation structure of, certain employees of a TARP recipient receiving exceptional assistance (Exceptional Assistance Recipient). The employees affected generally are the employees subject to the bonus payment limitations under section 111(b)(3)(D) of EESA, who generally are the TARP recipient’s senior executive officers (SEOs) whose compensation is subject to disclosure under Securities and Exchange Commission rules, and a number (determined by the level of TARP assistance received) of the next most highly compensated employees. In addition, the Special Master must approve

1 For purposes of this notice, an advisory opinion includes any portion of a determination with respect to certain employees of Exceptional Assistance Recipients (see §30.16 Q–16(a)(3)(i) and (ii)), to the extent such portion of the determination addresses compensation arrangements or rights to payments that are not required to be approved by the Special Master under §30.16(a)(3)(i) or (ii) (Q–16(a)(3)(i) or (ii)) of the Interim Final Rule, for example because the determination addresses amounts payable pursuant to valid written employment contracts not subject to section 111 of EESA by virtue of the grandfathering rule of section 111(b)(3)(D)(iii) of EESA.

December 28, 2009 965 2009–52 I.R.B.

to qualify as a short-term deferral, consistent with this notice.

III. Guidance

A. Eligibility

The guidance set forth in section III.B of this Notice applies to a service provider of a TARP recipient only if:

(1) the advisory opinion is addressed to that TARP recipient, and specifically addresses the compensation arrangement between the TARP recipient and the service provider;

(2) the TARP recipient has fully disclosed to the Special Master the identities of any similarly situated service providers of the TARP recipient and, to the extent requested by the Special Master, included those service providers in a request for an advisory opinion (for this purpose, an employee subject to §30.16(a)(3)(i) (Q–16(a)(3)(i)) of the Interim Final Rule, which addresses certain employees of Exceptional Assistance Recipients (generally the SEOs and the next 20 most highly compensated employees), will not be treated as similarly situated to an employee subject to §30.16(a)(3)(ii) (Q–16(a)(3)(ii)) of the Interim Final Rule, which addresses certain other employees of Exceptional Assistance Recipients (generally the 26 ^th

through 100 ^th most highly compensated employees and any remaining executive officers), and an employee not in either of those groups of employees will not be treated as similarly situated to an employee in one of those groups);

(3) the advisory opinion explicitly sets forth (a) a revised time and form of payment for the compensation that would have complied with the otherwise applicable requirements of § 409A(a) had such revised time and form of payment been the original time and form of payment, (b) a condition on payment that is directly related to the financial assistance received by the TARP recipient under the TARP program or the ability of the TARP recipient to repay the TARP assistance (for example, a condition that the amount cannot be paid prior to the repayment of all or a specified percentage or amount of the TARP assistance), or (c) a combination of (a) and (b);

(4) the advisory opinion does not authorize the TARP recipient or service provider to elect another time and form of pay

lated conditions, such as the prior repayment of some or all of the financial assistance received by the TARP recipient. The Special Master and TARP recipients have raised the issue of the application of § 409A(a) to such changes in the time and form of payment of a compensation arrangement and of the tax consequences under that section of adherence to conditions that may apply. Specifically, TARP recipients have noted that compliance with changes as part of the overall restructuring of a compensation arrangement would often result in delays in payments and possibly acceleration of certain payments that would not comply with § 409A(a). Thus, in the absence of the guidance provided for in this notice, the TARP recipient would be forced to choose between (i) making a payment under the original terms of an agreement that the Special Master determined to be inconsistent with the purposes of EESA or TARP, or otherwise contrary to the public interest, or (ii) instead making a payment that the Special Master has determined to be consistent with the purposes of EESA or TARP, and otherwise to be consistent with the public interest, but that also would result in severe adverse tax consequences to the individual receiving the payment. The application of § 409A(a) in these circumstances would produce a disincentive for TARP recipients to comply with the Special Master’s advisory opinions and act in accordance with the public interest, severely diminishing the Special Master’s ability to fulfill his intended role and damaging the entire TARP program. Furthermore, in these circumstances the changes in the time and form of payment result from a determination by the Special Master that the original time and form of payment terms were inconsistent with the purposes of EESA or TARP or otherwise contrary to the public interest. Finally, the final regulations under § 409A were promulgated before the enactment of EESA and ARRA and did not consider or address the need for an exception for a delay or acceleration of a payment under a nonqualified deferred compensation plan as a condition of receiving a favorable advisory opinion.

Section 1.409A–2(b)(7)(iii) provides that the Commissioner, in guidance of general applicability, may prescribe events that constitute exceptions to the prohibition on the delay of payment set forth

under § 409A. Sections 1.409A–2(b)(7)(i) and (ii) provide specific exceptions allowing for the delay of payment to the extent making the payment would result in the payment not being deductible under § 162(m), or would result in violations of laws, including Federal securities laws and other applicable laws. These provision of the regulations resolve conflicts between § 409A and other laws by providing exceptions to the limitations under § 409A on further deferral of nonqualified deferred compensation, where compliance with those requirements would subject the employer to unfavorable tax treatment under § 162(m) or would violate other applicable law. The Treasury Department and IRS have determined that a delay in payment to comply with an advisory opinion of the Special Master in accordance with the guidance set forth in section III of this notice is another such event and the disclosure by the TARP recipient to the Special Master of all similarly situated service providers and, if requested by the Special Master, such information as may be necessary to make those service providers also subject to an advisory opinion, will satisfy the condition that the TARP recipient treat all payments to similarly situated service providers on a reasonably consistent basis. Section 409A(a)(3) authorizes the Secretary, by regulation, to permit a nonqualified deferred compensation plan to accelerate the time or schedule of payment of compensation deferred under the plan.

For the reasons discussed above, the Treasury and the IRS find that guidance permitting a TARP recipient to comply with an advisory opinion of the Special Master under the circumstances set out in this notice without triggering adverse tax consequences under § 409A(a) is necessary and appropriate. Pursuant to the authority in § 409A(a)(3), the Treasury Department and the IRS intend to issue regulations to allow for changes in the time and form of payment of nonqualified deferred compensation, including the acceleration of payments under a nonqualified deferred compensation plan by a TARP recipient, to the extent necessary to comply with an advisory opinion or other determination issued by the Special Master and to specify when a delay in making a payment as a result of conditions imposed pursuant to such an advisory opinion or other determination will not cause an amount to fail

2009–52 I.R.B. 966 December 28, 2009

ient anticipates or reasonably should anticipate that the payment will be permissible pursuant to the advisory opinion.

(3) Payment of a deferred amount before the original payment date pursuant to an advisory opinion, EESA or the regulations thereunder (including §§30.11(a) and 30.16(a)(3) (Q–11(a) and Q–16(a)(3)) of the Interim Final Rule (Special Master approval of certain payments to employees of TARP recipients receiving exceptional financial assistance) ² will be treated as a permissible acceleration. For this purpose, arrangements that provide for payment upon, or an earlier payment date resulting from, the satisfaction of a TARP-related condition, such as a repayment of some or all of the TARP assistance, will be treated as providing for a permissible acceleration of a payment under §409A.

(4) Once the TARP recipient and service provider have agreed to a revised time and form of payment pursuant to an advisory opinion and have set forth the revised time and form of payment in writing, the revised time and form of payment is treated as the time and form of payment for purposes of determining future compliance with § 409A and the regulations thereunder.

(5) Nothing in this notice is intended to permit corrections of failures to comply with § 409A, or to otherwise affect the application of § 409A to a compensation arrangement, including the application of § 409A to any change to a compensation arrangement that does not meet the conditions of section III.A of this notice.

C. Effective date

The guidance in this notice is effective for arrangements addressed in advisory opinions issued by the Special Master pursuant to EESA and the guidance thereunder after September 30, 2009.

IV. Drafting Information

The principal author of this notice is Keith Ranta of the Office of Division Counsel/Associate Chief Counsel (Tax

ment other than in a manner compliant with § 409A(a) and the regulations thereunder without regard to the special rules set forth in this notice regarding compliance with advisory opinions (for this purpose a decision to repay some or all of the TARP assistance will not be treated as an election as to the time and form of payment, even if such repayment may affect the timing of some or all of the amount payable);

(5) the TARP recipient and the service provider enter into a written agreement containing the revised time and form of payment and any applicable conditions on payment not later than the end of the service provider’s taxable year in which the advisory opinion is issued or the 15 ^th day of the third month following the date the advisory opinion is issued, if later; and

(6) the TARP recipient and the service provider of the TARP recipient comply with the terms of the advisory opinion in all material respects.

B. Application of § 409A(a)

With respect to an arrangement between a TARP recipient and a service provider of the TARP recipient, if the conditions of section III.A. of this notice are met, changes in the time and form of payment pursuant to an advisory opinion will be treated in the following manner for purposes of § 409A(a) and the regulations thereunder:

(1) A failure to pay an amount upon the originally designated payment date will not be treated as an impermissible initial deferral election or subsequent deferral election, provided that the amount is paid pursuant to the advisory opinion. For this purpose, if the advisory opinion sets forth new payment dates pursuant to section III.A.3.a. of this notice, whether the amount is paid pursuant to the advisory opinion and in accordance with § 409A will be determined after application of the payment provisions under § 1.409A–3(d). For example, with respect to a payment date that is specified in the advisory opinion, the amount generally will be treated

as paid pursuant to the advisory opinion if it is paid no earlier than 30 days before the specified payment date and no later than the last day of the service provider’s taxable year in which the specified payment date occurs or, if later, the 15 ^th day of the third calendar month after the specified payment date (in each case so long as the service provider is not permitted, directly or indirectly, to designate the taxable year in which the amount is paid). If the advisory opinion sets forth TARP-related conditions pursuant to section III.A.3.b. of this notice that must be met before a service recipient can pay an amount (for example, a prohibition on a payment being made until the service recipient repays all or a specified amount or percentage of TARP financial assistance), the amount will be treated as paid pursuant to the advisory opinion and in accordance with § 409A if it is paid at the earliest date at which the service recipient reasonably anticipates that the making of the payment will be permissible under such advisory opinion. For example, with respect to satisfaction of TARP-related conditions, the amount generally will be treated as paid pursuant to the advisory opinion if it is paid upon satisfaction of the TARP-related conditions.

(2) To the extent compliance with an advisory opinion requires payment of an amount that otherwise qualified as a shortterm deferral under § 1.409A–1(b)(4) at a time or in a form that would cause such amount to be treated as deferred compensation subject to § 409A, except as otherwise provided in the next sentence, the amount will be treated as deferred compensation under § 409A once the time and form of payment have been changed. To the extent that an advisory opinion requires only that the payment of such an amount be delayed until specified TARP-related conditions are met, and does not otherwise prescribe changes in the time or form of payment, such condition will not cause the amount to fail to qualify as a short-term deferral provided that the amount is paid at the earliest date at which the service recip

2 The treatment under § 409A of required deferrals of payments under EESA and the regulations thereunder was discussed in the preamble to the Interim Final Rule (IFR). Taxpayers may rely on the guidance provided in that discussion. In addition, because the determinations by the Special Master with respect to certain employees of Exceptional Assistance Recipients (generally the executive officers and any other employees that are among the top 100 most highly compensated employees) are required under the IFR (see §30.16(a)(i) and (ii) (Q–16(a)(3)(i) and (ii)), taxpayers may also apply that guidance to any changes to existing rights required by those determinations, so that any resulting delay in a payment will not constitute a failure to comply with § 409A and will not cause a payment that otherwise would have been a short-term deferral to be treated as a payment of deferred compensation. Because that discussion did not address the potential for the required acceleration of a payment as part of an opinion requiring modifications of a compensation structure, that guidance has been provided in this notice. The guidance referred to in the preamble to the IFR and provided in this footnote is not applicable to advisory opinions provided under §30.16(a)(4) (Q–16(a)(4)) of the IFR, including the portion of a Special Master determination under §30.16(a)(i) and (ii) (Q–16(a)(3)(i) and (ii)) of the IFR that is an advisory opinion. (See note 1 of this notice).

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Exempt and Government Entities), although other Treasury and IRS officials participated in its development. For further information on the provisions of this notice, contact Keith Ranta at (202) 927–9639 (not a toll-free call). For further information about the Office of the Special Master for TARP Executive Compensation, contact that office at (202) 622–0667.

Qualified Transportation Fringes

Notice 2009–95

This notice delays the effective date of Revenue Ruling 2006–57. Revenue Ruling 2006–57 provides guidance to employers on the use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringes under sections 132(a)(5) and (f) of the Code. This guidance is intended to provide relief to mass transit providers that have been unable to update their present systems in order to comply with the Revenue Ruling guidelines prior to the current effective date of January 1, 2010. The effective date of Revenue Ruling 2006–57 is further delayed until January 1, 2011. Revenue Ruling 2006–57 is modified.

Revenue Ruling 2006–57, 2006–2 C.B. 911, provides guidance to employers on the use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringes under Internal Revenue Code §§ 132(a)(5) and 132(f). The ruling’s effective date was set for January 1, 2008. In 2007, however, Treasury and the IRS became aware that certain transit systems needed additional time to modify their technology and make it compatible with the requirements for vouchers set forth in Revenue Ruling 2006–57. Consequently, Treasury and the IRS delayed the effective date of Revenue

For Plan Years

Ruling 2006–57 until January 1, 2009. See Notice 2007–76, 2007–2 C.B. 735. In 2008, Treasury and the IRS further delayed the effective date of Revenue Ruling 2006–57 until January 1, 2010. See Notice 2008–74, 2008–38 I.R.B. 718. Certain transit systems need additional time to complete the process of adapting their technology to achieve compatibility with the requirements for vouchers. Therefore, the ruling’s effective date is further delayed until January 1, 2011. Nevertheless, employers and employees may rely on Revenue Ruling 2006–57 with respect to transactions occurring prior to January 1, 2011.

The principal author of this notice is Syd Gernstein of the Office of Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this notice, contact Syd Gernstein at (202) 622–6040 (not a toll-free call).

Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Notice 2009–96

This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate

Corporate Bond Weighted

under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

CORPORATE BOND WEIGHTED AVERAGE INTEREST RATE

Sections 412(b)(5)(B)(ii) and 412(l)(7)(C)(i), as amended by the Pension Funding Equity Act of 2004 and by the Pension Protection Act of 2006 (PPA), provide that the interest rates used to calculate current liability and to determine the required contribution under § 412(l) for plan years beginning in 2004 through 2007 must be within a permissible range based on the weighted average of the rates of interest on amounts invested conservatively in long term investment grade corporate bonds during the 4-year period ending on the last day before the beginning of the plan year.

Notice 2004–34, 2004–1 C.B. 848, provides guidelines for determining the corporate bond weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability. That notice establishes that the corporate bond weighted average is based on the monthly composite corporate bond rate derived from designated corporate bond indices. The methodology for determining the monthly composite corporate bond rate as set forth in Notice 2004–34 continues to apply in determining that rate. See Notice 2006–75, 2006–2 C.B. 366. The composite corporate bond rate for November 2009 is 5.79 percent. Pursuant to Notice 2004–34, the Service has determined this rate as the average of the monthly yields for the included corporate bond indices for that month.

The following corporate bond weighted average interest rate was determined for plan years beginning in the month shown below.

Beginning in Permissible Range

Month Year

Average 90% to 100%

December 2009 6.42 5.78 6.42

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monthly corporate bond yield curve, the 24-month average corporate bond segment rates, and the funding transitional segment rates used to compute the target normal cost and the funding target. Pursuant to Notice 2007–81, the monthly corporate bond yield curve derived from November 2009 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of November 2009 are, respectively, 2.35, 5.57, and 6.29. The three 24-month average corporate bond segment rates applicable for December 2009 under the election of § 430(h)(2)(G)(iv) are as follows:

Third Segment

YIELD CURVE AND SEGMENT RATES

Generally for plan years beginning after 2007 (except for delayed effective dates for certain plans under sections 104, 105, and 106 of PPA), § 430 of the Code specifies the minimum funding requirements that apply to single employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates

First Segment

(“segment rates”), each of which applies to cash flows during specified periods. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates. For plan years beginning in 2008 and 2009, a transitional rule under § 430(h)(2)(G) provides that the segment rates are blended with the corporate bond weighted average as specified above. An election may be made under § 430(h)(2)(G)(iv) to use the segment rates without applying the transitional rule.

Notice 2007–81, 2007–2 C.B. 899, provides guidelines for determining the

Second Segment

4.71 6.67 6.77

The transitional segment rates under § 430(h)(2)(G) applicable for December 2009, taking into account the corporate

For Plan Years

Beginning in

bond weighted average of 6.42 stated above, are as follows:

First Segment

Second Segment

Third Segment

2008 5.85 6.50 6.54 2009 5.28 6.59 6.65

multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The following rates were determined for plan years beginning in the month shown below.

The transitional rule of § 430(h)(2)(G) does not apply to plan years starting in 2010. Therefore, for a plan year starting in 2010 with a lookback month to December 2009, the funding segment rates are the three 24-month average corporate bond segment rates applicable for December 2009, listed above without blending for the transitional period.

30-YEAR TREASURY SECURITIES INTEREST RATES

Section 417(e)(3)(A)(ii)(II) (prior to amendment by PPA) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the

Secretary may by regulations prescribe. Section 1.417(e)–1(d)(3) of the Income Tax Regulations provides that the applicable interest rate for a month is the annual rate of interest on 30-year Treasury securities as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.

The rate of interest on 30-year Treasury securities for November 2009 is 4.31 percent. The Service has determined this rate as the average of the yield on the 30-year Treasury bond maturing in August 2039 determined each day through November 10, 2009, and the yield on the 30-year Treasury bond maturing in November 2039 determined each day for the balance of the month.

Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to

December 28, 2009 969 2009–52 I.R.B.

For Plan Years

30-Year Treasury Weighted

Beginning in Permissible Range

Month Year

Average 90% to 105%

December 2009 4.36 3.92 4.57

termining the minimum present value segment rates. Pursuant to that notice, the minimum present value transitional segment rates determined for November 2009, taking into account the November 2009 30-year Treasury rate of 4.31 stated above, are as follows:

Third Segment

MINIMUM PRESENT VALUE SEGMENT RATES

Generally for plan years beginning after December 31, 2007, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a

For Plan Years

Beginning in

24-month average. For plan years beginning in 2008 through 2011, the applicable interest rates are the monthly spot segment rates blended with the applicable rate under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning in 2007. Notice 2007–81 provides guidelines for de

First Segment

Second Segment

2008 3.92 4.56 4.71 2009 3.53 4.81 5.10 2010 3.13 5.07 5.50

DRAFTING INFORMATION

The principal author of this notice is Tony Montanaro of the Employee Plans,

Tax Exempt and Government Entities Division. Mr. Montanaro may be e-mailed at RetirementPlanQuestions@irs.gov .

2009–52 I.R.B. 970 December 28, 2009

Table I

Monthly Yield Curve for November 2009

Derived from November 2009 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

December 28, 2009 971 2009–52 I.R.B.

Extension of Deadline to Adopt Certain Retirement Plan Amendments

Notice 2009–97

I. Purpose

This notice extends the deadline for amending qualified retirement plans to meet certain requirements of the Internal Revenue Code that were added by the Pension Protection Act of 2006 (PPA ’06), Pub. L. 109–280, and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110–458. The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010. This extension applies to:

1. The deadline for amending singleemployer defined benefit plans to meet the requirements of §§ 401(a)(29) and 436, relating to funding-based limits on benefits and benefit accruals under single-employer plans;

2. The deadline for amending cash balance and other applicable defined benefit plans, within the meaning of § 411(a)(13)(C), to meet the requirements of § 411(a)(13) (other than § 411(a)(13)(A)) and § 411(b)(5), relating to vesting and other special rules applicable to these plans; and

3. The deadline for amending applicable defined contribution plans, within the meaning of § 401(a)(35)(E), to meet the requirements of § 401(a)(35), relating to diversification requirements for certain defined contribution plans.

This notice also provides limited relief from the anti-cutback requirements of § 411(d)(6) for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of §§ 401(a)(29) and 436. In addition, this notice provides that limited § 411(d)(6) relief is expected to be granted for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of § 411(b)(5) once final regulations under §§ 411(a)(13) and 411(b)(5) are issued.

II. Background

Section 401(a)(29) requires single-employer defined benefit plans that are sub

ject to the minimum funding requirements of § 412 to meet the requirements of § 436. Section 436, which was added by section 113(a)(1) of PPA ’06, imposes fundingbased limits on benefits and benefit accruals under single-employer plans. The requirements of § 436 generally apply to plan years that begin after December 31, 2007. Final regulations under § 436 were published in the Federal Register on October 15, 2009, 74 F.R. 53004.

Section 411(a)(13), which was added by section 701(b)(2) of PPA ’06, contains special rules for cash balance and other applicable defined benefit plans. Section 411(a)(13)(A) provides, in general, that an applicable defined benefit plan will not fail to satisfy the requirements of § 411(a)(2), 411(c), or 417(e) solely because the present value of the participant’s accrued benefit under the plan equals the balance in the participant’s hypothetical account or the accumulated percentage of the participant’s final average compensation. Section 411(a)(13)(B) requires an applicable defined benefit plan to provide 100 percent vesting for employer-derived benefits on completion of three years of service. Section 411(a)(13) is generally effective for years that begin after December 31, 2007, and for distributions made after August 17, 2006.

Section 411(b)(5), which was added by section 701(b)(1) of PPA’06 and is generally effective for years that begin after December 31, 2007, contains special rules for applicable defined benefit plans with regard to the requirements of § 411(b)(1)(H), which prohibits a defined benefit plan from ceasing an employee’s benefit accruals or reducing an employee’s rate of benefit accrual because of the attainment of any age.

Notice 2007–6, 2007–1 C.B. 273, provides transitional guidance regarding the requirements of §§ 411(a)(13) and 411(b)(5). Proposed regulations under §§ 411(a)(13) and 411(b)(5) were published in the Federal Register on December 28, 2007, 72 F.R. 73690. Announcement 2009–82, 2009–48 I.R.B. 720, announced certain relief with respect to the requirements of § 411(b)(5)(B)(i), relating to the interest crediting rate in applicable defined benefit plans. Final and additional proposed regulations under §§ 411(a)(13) and 411(b)(5) are expected to be published in the near future.

Section 401(a)(35), which was added by section 901(a)(1) of PPA ’06, requires certain defined contribution plans to meet certain diversification requirements with respect to investments in employer securities. The requirements of § 401(a)(35) generally apply to plan years that begin after December 31, 2007. Notice 2006–107, 2006–2 C.B. 1114, provides transitional guidance regarding § 401(a)(35). Proposed regulations under § 401(a)(35) were published in the Federal Register on January 3, 2008, 73 F.R. 421. Final regulations under § 401(a)(35) are expected to be published in the near future.

Section 401(b) provides a period during which a plan may be amended retroactively to comply with the Code’s qualification requirements. Section 1.401(b)–1 of the Treasury regulations and Rev. Proc. 2007–44, 2007–2 C.B. 54, describe 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 extend the remedial amendment period.

Section 5.05 of Rev. Proc. 2007–44 provides that when there are statutory or regulatory changes to the plan qualification requirements that will impact provisions of the written plan document, the adoption of an interim amendment will generally be required by the later of the end of the plan year in which the change is first effective or the due date of the employer’s tax return for the tax year that includes the date the change is first effective.

Section 411(d)(6) provides generally that a plan will not satisfy § 401(a) if an amendment to the plan decreases a participant’s accrued benefit. For this purpose, a plan amendment which has the effect of eliminating or reducing an early retirement benefit or a retirement-type subsidy or eliminating an optional form of benefit with respect to benefits attributable to service before the amendment is treated as reducing accrued benefits. Section 401(b) does not relieve a plan of the requirement to satisfy § 411(d)(6) with respect to any amendment.

Section 1.411(d)–4, A–2(b)(2)(i), provides that a plan may be amended to eliminate or reduce a § 411(d)(6) protected benefit, within the meaning of § 1.411(d)–4, A–1, if the following three requirements

2009–52 I.R.B. 972 December 28, 2009

This extension does not restrict rights with respect to the timing of plan amendments set out in Rev. Proc. 2007–44. For example, under section 5.03(2) of Rev. Proc 2007–44, the extension of the remedial amendment period to the end of the applicable remedial amendment cycle for a disqualifying provision continues to apply to a disqualifying provision where the employer reasonably and in good faith determines during the period when an interim amendment to reflect a qualification change would otherwise be required that no amendment is required because the qualification change does not impact provisions of the written plan document.

IV. Section 411(d)(6) Relief for Certain Amendments

A. Relief for Amendments Under §§ 401(a)(29) and 436

Pursuant to § 7805(b) and § 1.411(d)–4, A–2(b)((2)(i), an interim plan amendment that eliminates or reduces a § 411(d)(6) protected benefit will not cause a plan to fail to meet the requirements of § 411(d)(6) if the amendment is adopted by the last day of the first plan year that begins on or after January 1, 2010, and the elimination or reduction is made only to the extent necessary to enable the plan to meet the requirements of §§ 401(a)(29) and 436.

B. Relief for Amendments Under § 411(b)(5)

As provided in Announcement 2009–82, it is expected that once final regulations under § 411(b)(5)(B)(i) are issued, relief from the requirements of § 411(d)(6) will be granted to permit plan amendments that are adopted prior to the effective date of those final regulations to reduce the interest crediting rate on participants’ accounts to the extent necessary to constitute a permissible rate under those final regulations. More broadly, pursuant to this notice, once final regulations under §§ 411(a)(13) and 411(b)(5) are issued, it is expected that relief from the requirements of § 411(d)(6) will be granted for a plan amendment that eliminates or reduces a § 411(d)(6) protected benefit, provided that the amendment is adopted by the last day of the first plan year that begins on or after January 1, 2010, and the elimination or reduction is made only to the extent necessary to enable the plan to meet the requirements of § 411(b)(5).

are met: the amendment constitutes timely compliance with a change in law affecting plan qualification; there is an exercise of § 7805(b) relief by the Commissioner; and the elimination or reduction is made only to the extent necessary to enable the plan to continue to satisfy the requirements for qualified plans.

Section 1107 of PPA ’06 provides, in general, that, except as provided by the Secretary of the Treasury, a plan will not fail to satisfy the anti-cutback requirements of § 411(d)(6) as a result of a plan amendment made pursuant to a provision of PPA ’06 or regulations thereunder, provided that:

(1) the plan amendment is adopted no later than the section 1107 date, which is the last day of the first plan year that begins on or after January 1, 2009 (or 2011, in the case of a governmental plan as defined in § 414(d));

(2) if the plan amendment is required to enable the plan to continue to satisfy § 401(a), the amendment applies retroactively to the effective date of the provision of PPA ’06 or regulation; and

(3) the plan is operated as if the plan amendment were in effect during the period beginning on the effective date of the amendment and ending on the section 1107 date or, if earlier, the date the amendment is adopted.

Section 1107 of PPA ’06 also provides that a plan will not be treated as failing to be operated in accordance with its terms during the period described in (3), provided that the conditions in (1) through (3) are met.

Section 5.07(2) of Rev. Proc. 2007–44 provides an exception from the general deadline for adopting interim amendments. This section provides that the deadline for adopting an interim amendment pursuant to a provision of PPA ’06 or regulations thereunder is the section 1107 date. This is also the deadline for adopting a discretionary amendment (within the meaning of section 5.05(2) of Rev. Proc. 2007–44) pursuant to a provision of PPA ’06 or regulations thereunder.

The extension of time to adopt plan amendments that is provided by section 1107 of PPA ’06 applies to any plan amendment that is adopted pursuant to a provision of PPA ’06 or regulations thereunder. For example, section

1107 of PPA ’06 extends the otherwise applicable deadline for adopting plan amendments to meet the requirements, if applicable, of §§ 401(a)(29) and 436, 401(a)(35), 401(a)(36), 401(k)(13) and 414(w), 411(a)(2), 411(a)(13), 411(b)(5), 417(a), 417(e), and 432 to the section 1107 date. In addition to extending the time by which an amendment pursuant to a provision of PPA ’06 or regulations thereunder would otherwise have to be adopted, section 1107 of PPA ’06 also generally provides relief from the requirements of § 411(d)(6) that would otherwise apply to the amendment.

Under the Commissioner’s authority to extend remedial amendment periods under § 401(b), Part III of this notice grants a further extension of time, beyond the section 1107 date, to adopt certain plan amendments. However, except as described in Part IV of this notice regarding amendments for §§ 401(a)(29) and 436 and § 411(b)(5), this notice does not grant relief from the requirements of § 411(d)(6) for amendments adopted after the section 1107 date. For example, an amendment of an applicable defined benefit plan to eliminate, with respect to a post-August 17, 2006 distribution, the excess of a single-sum distribution over a participant’s hypothetical account balance must comply with the generally applicable requirements of § 411(d)(6) if the amendment is adopted after the section 1107 date.

III. Extension of Deadline for Adopting Amendments Under §§ 401(a)(29) and 436, 401(a)(35), 411(a)(13) (other than § 411(a)(13)(A)), and 411(b)(5)

In order to give plan sponsors time to adopt plan amendments that take into account recently issued final regulations and those that are expected to be issued in the near future, the deadline for adopting an interim or discretionary plan amendment under §§ 401(a)(29) and 436, 401(a)(35), 411(a)(13) (other than § 411(a)(13)(A)), and 411(b)(5) is extended to the last day of the first plan year that begins on or after January 1, 2010. A plan must continue to satisfy the operational compliance requirements of section 1107 of PPA ’06 as a condition of the extension of the deadline for adopting plan amendments provided by this notice.

December 28, 2009 973 2009–52 I.R.B.

Pursuant to Notice 2008–108, as an alternative to submitting a plan in Cycle D (February 1, 2009 - January 31, 2010), a plan sponsor of a Cycle D plan whose first plan year beginning after January 1, 2009 ends on or after February 1, 2010, may defer submission of its plan until Cycle E (February 1, 2010 –. January 31, 2011). In order to defer submission of such a plan until Cycle E, an application for a determination letter must be timely filed in Cycle E. In such a case, the plan will be treated as having been filed within the plan’s EGTRRA remedial amendment period and will be reviewed on the basis of the 2009 Cumulative List. However, such a plan will be treated as a Cycle E plan solely for this initial cycle, and all subsequent submissions will be made in Cycle D.

Rev. Proc. 2009–36, 2009–35 I.R.B. 304, provides, in part, that the sponsor of an individually designed governmental plan may make a one-time election to be in Cycle E (instead of Cycle C), as the initial EGTRRA remedial amendment cycle for the plan.

III. APPLICATION OF 2009 CUMULATIVE LIST

This notice is being issued for purposes of the determination letter program for plans submitted for determination letters during the Cycle E submission period. In Rev. Proc. 2005–66, 2005–2 C.B. 509, the Service announced the opening of the initial five-year remedial amendment cycle. In accordance with Rev. Proc. 2007–44, the Service will start accepting determination letter applications for Cycle E plans beginning on February 1, 2010. The 12-month submission period for Cycle E plans will end January 31, 2011.

The 2009 Cumulative List, set forth in section VI of this notice, informs plan sponsors of issues the Service has specifically identified for review in determining whether a plan filing in Cycle E has been properly updated. Specifically, the 2009 Cumulative List reflects law changes under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), Pub. L. 107–16 (with technical corrections made by the Job Creation and Worker Assistance Act of 2002

V. Determination Letters

The Service’s review of an application for a determination letter that is submitted before February 1, 2011, will not take into account the requirements of §§ 401(a)(29) and 436. The Service’s review of an application for a determination letter submitted after January 31, 2009, and before February 1, 2011, will take into account the requirements of §§ 401(a)(35), 411(a)(13) (including § 411(a)(13)(A)), or 411(b)(5), only if the plan has been amended to meet those requirements.

VI. Effect on Other Documents

Section 5.07(2) of Rev. Proc. 2007–44 is modified.

Notice 2008–108, 2008–50 I.R.B. 1275, which contains the 2008 Cumulative List of Changes in Plan Qualification Requirements, is modified to provide that the Service’s review of an application for a determination letter submitted during the submission period beginning on February 1, 2009, will take into account the requirements of §§ 401(a)(35), 411(a)(13) (including § 411(a)(13)(A)), or 411(b)(5), only if the plan has been amended to meet those requirements.

Drafting Information

The principal author of this notice is James P. Flannery of the Employee Plans, Tax Exempt and Government Entities Division. Questions regarding this notice may be sent via e-mail to retirementplanquestions@irs.gov .

2009 Cumulative List of Changes in Plan Qualification Requirements

Notice 2009–98

I. PURPOSE

This notice contains the 2009 Cumulative List of Changes in Plan Qualification Requirements (2009 Cumulative List) described in section 4 of Rev. Proc. 2007–44, 2007–2 C.B. 54. The 2009 Cumulative List is to be used primarily by

plan sponsors of individually designed plans that are in Cycle E. An individually designed plan is in Cycle E if it is a single employer plan where the last digit of the employer identification number of the plan sponsor is 5 or 0, or it is a § 414(d) governmental plan for which an election has been made by the plan sponsor to treat Cycle E as the initial EGTRRA remedial amendment cycle for the plan.

The list of changes in section VI of this notice does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory, or guidance changes. The general deadline for timely adoption of an interim or discretionary amendment can be found in section 5.05 of Rev. Proc. 2007–44.

II. BACKGROUND

Rev. Proc. 2007–44 sets forth procedures for issuing opinion, advisory, and determination letters and describes the five-year remedial amendment cycle for individually designed plans and the six-year remedial amendment cycle for pre-approved plans. In addition, section 5.05 of Rev. Proc. 2007–44 provides the deadline for timely adoption of an interim amendment or discretionary amendment.

Under section 4 of Rev. Proc. 2007–44, the Internal Revenue Service intends to annually publish a Cumulative List to identify statutory, regulatory, and guidance changes that must be taken into account in submissions by plan sponsors to the Service for opinion, advisory, and determination letters whose submission period begins on February 1st following issuance of the Cumulative List.

In Notice 2008–108, 2008–50 I.R.B. 1275, the Service published the 2008 Cumulative List of Changes in Plan Qualification Requirements (2008 Cumulative List). ¹

Under section 1107 of the Pension Protection Act of 2006 (PPA ’06), a plan amendment made pursuant to any amendment made by PPA ’06 generally may be retroactively effective, if, in addition to meeting the other applicable requirements, the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2009 (January 1, 2011 in the case of a governmental plan).

1 See Notice 2007–94, 2007–2 C.B. 1179; Notice 2007–3, 2007–1 C.B. 255; Notice 2005–101, 2005–2 C.B. 1219; and Notice 2004–84, 2004–2 C.B. 1030, for the 2007, 2006, 2005, and 2004 Cumulative Lists, respectively.

2009–52 I.R.B. 974 December 28, 2009

be relied on with respect to the requirements of WRERA section 201.

A plan restatement submitted in Cycle E must include the applicable WRERA provisions identified in section VI of this notice.

VI. 2009 CUMULATIVE LIST OF CHANGES IN PLAN QUALIFICATION REQUIREMENTS

The following list consists of statutory provisions and associated guidance which reflect changes to plan qualification requirements. Miscellaneous guidance is also provided. The Service has identified below plan qualification requirements which were not on the 2008 or earlier Cumulative Lists as “(New)”. Thus, the 2009 Cumulative List contains those plan qualification requirements listed in the 2004, 2005, 2006, 2007, and 2008 Cumulative Lists as well as additional 2009 plan qualification requirements.

1. 72(p) : Section 1.72(p)–1 of the Income Tax Regulations relating to plan loans was published on December 3, 2002 (67 Fed. Reg. 71821). (2004 C. L.).
2. 401(a):

of the Code regarding permissible normal retirement ages were published on May 22, 2007 (72 Fed. Reg. 28604). (2006 C. L.).

468, provides temporary relief, for certain pension plans under which the definition of normal retirement age may be required to be changed to comply with the regulations, but only until the first day of the first plan year that begins after June 30, 2008. (2007 C. L.).

I.R.B. 1080, provides that the Service and Treasury intend to amend the normal retirement age regulations to change the effective date for governmental plans to plan years begin

(JCWAA)), Pub. L. 104–147, the Pension Funding Equity Act of 2004 (PFEA), Pub. L. 108–218, the American Jobs Creation Act of 2004 (AJCA), Pub. L. 108–357, the Katrina Emergency Tax Relief Act of 2005 (KETRA), Pub. L. 109–73, the Gulf Opportunity Zone Act of 2005 (GOZA), Pub. L. 109–135, the Pension Protection Act of 2006 (PPA ’06), Pub. L. 109–280, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, Pub. L. 110–28, the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act), Pub. L. 110–245, the Emergency Economic Stabilization Act of 2008 (EESA), Pub. L. 110–343, and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), P.L. 110–458. The Service will not consider in its review of any determination letter application, for the submission period that begins February 1, 2010, any:

(1) guidance issued after October 1, 2009; (2) statutes enacted after October 1, 2009; (3) qualification requirements first effective in 2011 or later; or

(4) statutory provisions that are first effective in 2010, for which there is no guidance identified in this notice. ²

The 2009 Cumulative List does not include any items described in (1) through (4) above. However, in order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2009 Cumulative List.

The Service will not consider the proposed regulations identified in the footnotes of section VI of this notice in issuing determination letters, and such letters cannot be relied on with respect to the proposed regulations.

Terminating plans must include all law changes in effect at the time of termination. See section 8 of Rev. Proc. 2007–44 regarding plan termination.

IV. SPECIAL RULES FOR THE HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008

Under sections 104(d)(2) and 105(c) of the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act),

Pub. L. 110–245, a plan amendment made pursuant to sections 104(a) or 105(b)(1) of the HEART Act generally may be retroactively effective, if, in addition to meeting the other applicable requirements, the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2010 (January 1, 2012 in the case of a governmental plan).

Plans submitted in Cycle E must meet the amendment deadline for the HEART Act, if applicable. However, the Service will not consider the HEART Act in issuing determination letters because no guidance has been issued with respect to the HEART Act, and such letters cannot be relied on with respect to the HEART Act. The HEART Act provisions are listed in section VII of this notice.

Section 107(a) of the HEART Act extends the applicability of the qualified reservist distribution to individuals ordered or called to duty after December 31, 2007. The Service is treating an amendment made pursuant to section 107 of the HEART Act as if it was included in the amendments described in section 1107 of PPA ’06. See section VI of this notice, # 11, with respect to § 401(k)(2)(B)(i)(V) qualified reservist distributions.

V. SPECIAL RULES FOR THE WORKER, RETIREE, AND EMPLOYER RECOVERY ACT OF 2008

Section 201 of WRERA added section 401(a)(9)(H) to the Code. This provision provides, in part, a suspension of the minimum distribution requirement for 2009 applicable to defined contribution plans.

Under section 201(c)(2) of WRERA, a plan amendment made pursuant to WRERA section 201 generally may be retroactively effective, if, in addition to meeting the other applicable requirements, the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2011 (January 1, 2012 in the case of a governmental plan).

Plans submitted in Cycle E can be amended, at the option of plan sponsors to include WRERA section 201. However, the Service will not consider WRERA section 201 in issuing determination letters for Cycle E plans, and such letters cannot

2 The Service will also not consider the requirements of § 436 in its review of any Cycle E determination letter application. The Service will consider the requirements of §§ 401(a)(35), 411(a)(13), and 411(b)(5) in its review of a Cycle E determination letter application only if the plan has been amended to meet those requirements.

December 28, 2009 975 2009–52 I.R.B.

defined contribution plans provide employees with the freedom to divest publicly traded securities. ⁴ (2008 C. L.).

extends certain transitional guidance and transitional relief provided to certain defined contribution plans holding publicly traded employer securities under Notice 2006–107. (2008 C. L.).

the definition of one-participant retirement plan under § 401(a)(35)(E)(iv). (New).

10. 401(a)(36) : PPA ’06 § 905(b) added § 401(a)(36) regarding distributions to a participant who has attained age 62 and who has not separated from employment at the time of the distribution. (2008 C. L.).
11. 401(k) & 401(m) :

§ 401(k)(10) of the Code were amended by § 646(a)(1) of EGTRRA to permit distributions of elective deferrals from a § 401(k) plan upon severance from employment. (2004 C. L.).

rected the Secretary of the Treasury to revise the regulations relating to safe harbor hardship distributions of elective deferrals from § 401(k) plans so that the time the employee is prohibited from making elective and employee contributions is reduced from one year to six months after a hardship distribution. (2004 C. L.).

was amended by § 611(f) of EGTRRA to increase the maximum amount of qualified salary reduction contributions that can

ning on or after January 1, 2011. ³ (New).

I.R.B. 166, provides that the transfer of amounts from a trust under a plan qualified under § 401(a) to a nonqualified foreign trust is treated as a distribution from the transferor plan and that transfer of assets and liabilities from a qualified plan to a plan that satisfies § 1165 of the Puerto Rico Code is also treated as a distribution from the transferor plan. (2008 C. L.).

I.R.B. 403, provides that the exclusive benefit rule of § 401(a) is violated if the sponsorship of a qualified retirement plan is transferred from an employer to an unrelated taxpayer and the transfer is not in connection with a transfer of business assets or operations from the employer to the unrelated taxpayer. (2008 C. L.).

3. 401(a)(4):

of the Regulations relating to new comparability plans were published on June 29, 2001 (66 Fed. Reg. 34535). (2004 C. L.).

of the Regulations relating to new comparability plans were published on June 29, 2001 (66 Fed. Reg. 34535). (2005 C. L.).

544. (2005 C. L.).

545. 401(a)(5) : Section 401(a)(5)(G) of the Code was amended by PPA ’06 § 861(a)(1) with respect to governmental plans. (2008 C. L.).

546. 401(a)(9):

of the Regulations were published on April 17, 2002 and June 15, 2004 (67 Fed. Reg. 18988 and 69 Fed. Reg. 33288). (2004 C. L.).

§ 401(a)(9) were published on September 8, 2009 (74 Fed. Reg. 45993), which permit a governmental plan to comply with the required minimum distribution rules of § 401(a)(9) by using a reasonable and good faith interpretation of the statute. (New).

6. 401(a)(17) : Section 401(a)(17) of the Code was amended by § 611(c) of EGTRRA to increase the compensation limit to $200,000. (2004 C. L.).

277. (2004 C. L.).

278. 401(a)(26) : Section 401(a)(26)(G) of the Code was amended by PPA ’06 § 861(a)(1) with respect to governmental plans. (2008 C. L.).

279. 401(a)(31) :

by § 643(b) of EGTRRA to allow employees’ after-tax contributions to be rolled over under certain circumstances. (2004 C. L.).

amended by § 657(a) of EGTRRA (as amended by § 411(t) of JCWAA) to provide for the automatic rollover of certain mandatory distributions. The effective date is March 28, 2005. (2004 C. L.).

of EGTRRA (as amended by § 411(q) of JCWAA) amended the definition of eligible retirement plan in § 402 of the Code to include a § 403(b) annuity contract and eligible governmental § 457(b) plan. (2004 C. L.).

ified the definition of eligible rollover distribution to exclude hardship distributions. (2004 C. L.).

9. 401(a)(35) : PPA ’06 § 901(a)(1) added § 401(a)(35) requiring that

3 Notice 2009–86, 2009–46 I.R.B. 629, provides that the Service and Treasury intend to amend the normal retirement age regulations to change the effective date for governmental plans to plan years beginning on or after January 1, 2013.

4 Proposed regulations under § 401(a)(35) were published on January 3, 2008 (73 Fed. Reg. 421) and may be relied upon until final regulations are issued. The Service will consider the requirements of § 401(a)(35) in its review of a Cycle E determination letter application only if the plan has been amended to meet those requirements.

2009–52 I.R.B. 976 December 28, 2009

13. 402(c)(11) : PPA ’06 § 829(a)(1) added § 402(c)(11) to allow nonspouse beneficiaries to directly roll over distributions from a qualified plan to an individual retirement plan. (2008 C. L.).

395, provides guidance regarding § 402(c)(11). (2008 C. L.).

that plans provide for nonspouse beneficiary rollovers under § 402(c)(11), effective for plan years beginning after December 31, 2009. (New).

14. 402(f) : PPA ’06 § 1102(a) provides that notice required to be provided under § 402(f) may be provided as much as 180 days before the annuity starting date. ⁶ (2008 C. L.).

395, provides guidance regarding PPA ’06 § 1102. (2008 C. L.).

423, provides two safe harbor explanations that may be provided to recipients of eligible rollover distributions from an employer to satisfy § 402(f). (New).

§ 402(f)(2)(A) with respect to the definition of eligible rollover distribution. (New).

15. 402(g)(2) : WRERA § 109(b)(3) amended § 402(g)(2)(A)(ii) to eliminate the distribution of gap period earnings with excess deferrals. (New).
16. 402A : Section 402A of the Code was added by § 617 of EGTRRA to offer optional treatment of elective deferrals as designated Roth contributions to defined contribution plans, effective for taxable years beginning after December 31, 2005. (2004 C. L.).

and § 401(m) of the Code relating to designated Roth contributions were published on January 3, 2006 (71 Fed. Reg. 6). (2005 C. L.).

be made to SIMPLE 401(k) plans. (2004 C. L.).

amended by § 611(d) of EGTRRA to increase the applicable dollar amount. (2004 C. L.).

was amended by § 666 of EGTRRA to eliminate the multiple use test. (2004 C. L.).

and § 401(m) of the Code were published on December 29, 2004 (69 Fed. Reg. 78144). ⁵ (2004 C. L.).

C.B. 1448, provides that a plan will not fail to satisfy the requirements of a § 401(k) safe harbor plan because of a mid-year change to implement a designated Roth contribution program. (2007 C. L.).

relating to distributions from a § 401(k) plan on account of a participant’s hardship to permit the plan to treat a participant’s beneficiary under the plan the same as the participant’s spouse or dependent. (2008 C. L.).

395, provides guidance regarding PPA ’06 § 826. (2008 C. L.).

2007–1 C.B. 1448, provides that a plan will not fail to satisfy the requirements of a § 401(k) safe harbor plan because of a mid-year change to implement the PPA ’06 § 826 hardship withdrawals. (2008 C. L.).

§ 401(k)(2)(B)(i)(V) which permits reservists called to active duty after September 11, 2001 and before 2008 to take in-service distributions from a § 401(k) plan. (2008 C. L.).

Act extends the applicability of the qualified reservist distribution to individuals ordered

or called to active duty after December 31, 2007. (New).

§ 401(k)(3)(G) with respect to governmental plans. (2008 C. L.).

gap period income rule for excess contributions in § 401(k)(8)(A)(i). (2008 C. L.).

with respect to qualified automatic contribution arrangements. (2008 C. L.).

§ 401(k) with respect to qualified automatic contribution arrangements were published on February 24, 2009 (74 Fed. Reg. 8200). (New).

I.R.B. 391, provides information with respect to automatic contribution increases under automatic contribution arrangements. (New).

I.R.B. 413, provides sample amendments that plan sponsors can use to add automatic contribution features to their plans. (New).

the gap period income rule for excess aggregate contributions in § 401(m)(6)(A). (2008 C. L.).

with respect to qualified automatic contribution arrangements. (2008 C. L.).

§ 401(m) with respect to qualified automatic contribution arrangements were published on February 24, 2009 (74 Fed. Reg. 8200). (New).

12. 402(c)(2)(A) : PPA ’06 § 822(a) amended § 402(c)(2)(A) to permit nontaxable distributions from a qualified plan to be directly rolled over tax-free to either another qualified plan or a § 403(b) plan if the separate accounting requirements are met. (2008 C. L.).

5 Proposed amendments to the regulations under § 401(k) and § 401(m) were published on May 18, 2009 (74 Fed. Reg. 23134) and may be relied upon until final regulations are issued.

6 Proposed regulations under § 402(f) were published on October 9, 2008 (73 Fed. Reg. 59575) and may be relied upon until final regulations are issued.

December 28, 2009 977 2009–52 I.R.B.

C.B. 889, provides a sample amendment for Roth § 401(k) plans. (2006 C. L.).

of the Code were published on April 30, 2007 (72 Fed. Reg. 21103). (2006 C. L.).

17. 404 :

Code was amended by § 662(a) of EGTRRA (as amended by § 411(w) of JCWAA) to allow ESOP dividends to be reinvested without the loss of dividend deductions. (2005 C. L.).

285, provides guidance with respect to the changes made to § 404(k) of the Code and on the effective date of § 409(p) of the Code. (2005 C. L.).

18. 408(q): Section 408(q) of the Code was added by § 602 of EGTRRA (as amended by § 411(i) of JCWAA) to allow for deemed individual retirement accounts (IRAs) in an eligible retirement plan. (2004 C. L.).

lations was published on July 22, 2004 (69 Fed. Reg. 43735). (2004 C. L.).

19. 408A(e) : PPA ’06 § 824 added § 408A(e) which permits rollovers to Roth IRAs from accounts that are not designated Roth accounts that are part of qualified plans, § 403(b) plans, and § 457 plans. (2008 C. L.).

638, provides guidance regarding PPA ’06 § 824. (2008 C. L.).

20. 409 : Section 409(p) of the Code was added by § 656 of EGTRRA relating to restrictions on the allocation of employer securities in an ESOP maintained by an S corporation. (2005 C. L.).

lations was published on July 21, 2003 (68 Fed. Reg. 42970). (2005 C. L.).

ulations was published on December 17, 2004 (69 Fed. Reg. 75455). (2005 C. L.).

599, as modified and superseded by Rev. Proc. 2004–14, 2004–1 C.B. 489, allows a direct rollover from an ESOP maintained by an S corporation to an individual retirement plan (IRA). (2005 C. L.).

286, provides guidance with respect to whether an ESOP maintained by an S corporation is eligible for the delayed effective date of § 409(p) under § 656(d)(2) of EGTRRA. (2005 C. L.).

414, provides guidance relating to synthetic equity owned by a disqualified person in a nonallocation year of an ESOP maintained by an S corporation. (2005 C. L.).

on December 20, 2006 (71 Fed. Reg. 76134) that provide guidance concerning requirements under § 409(p) for ESOPs holding stock of S corporations. (2006 C. L.).

21. 410(b) : Final Regulations were published on July 21, 2006 (71 Fed. Reg.

41357. permitting some employees of tax-exempt organizations to be excluded when determining whether a § 401(k) plan meets the § 410(b) minimum coverage requirements. (2006 C. L.).

22. 411(a) :

amended by § 633 of EGTRRA (as amended by § 411(o) of JCWAA) to provide for faster vesting of matching contributions. (2004 C. L.).

the Final Regulations were published on August 9, 2006 (71 Fed. Reg. 45379) with respect to the interaction between the anti-cutback rules of § 411(d)(6) and the nonforfeitability requirements of § 411(a). (2006 C. L.).

amended by § 904 of PPA ’06 to provide for faster vesting of employer nonelective contributions. (2008 C. L.).

395, provides guidance regarding § 411(a), as amended by § 904 of PPA ’06. (2008 C. L.).

23. 411(a)(11) : Section 411(a)(11)(D) of the Code was added by § 648(a) of EGTRRA (as amended by § 411(r) of JCWAA) to allow amounts attributable to rollover contributions to be disregarded in determining the value of an account balance for involuntary distributions. (2004 C. L.).

notice required to be provided under § 411(a)(11) may be provided as much as 180 days before the annuity starting date. Section 1102(b) of PPA ’06 requires that the notice under § 411(a)(11) also include a description of the consequences of failing to defer receipt of a distribution. ⁷ (2008 C. L.).

395, provides guidance regarding PPA ’06 § 1102. (2008 C. L.).

24. 411(a)(13 ): PPA ’06 § 701(b)(2) added § 411(a)(13) with respect to special vesting rules for applicable defined benefit plans, such as cash balance plans. ⁸ (2008 C. L.).

provides guidance regarding cash balance plans and other hybrid defined benefit plans. (2008 C. L.).

§ 411(a)(13)(A). (New).

7 Proposed regulations under § 411(a)(11) were published on October 9, 2008 (73 Fed. Reg. 59575). Until final regulations are issued, a plan will be treated as complying with § 411(a)(11) if (1) the plan complies with either the proposed regulations or Q&A–32 and Q&A–33 in Notice 2007–7; or (2) if the plan administrator makes a reasonable attempt to comply with § 411(a)(11).

8 Proposed regulations under § 411(a)(13) were published on December 28, 2007 (72 Fed. Reg. 73680) and may be relied upon until final regulations are issued. The Service will consider the requirements of § 411(a)(13) in its review of a Cycle E determination letter application only if the plan has been amended to meet those requirements.

2009–52 I.R.B. 978 December 28, 2009

467, extends the transition relief provided in Notice 2006–89. (2008 C. L.).

31. 414(f)(6) : PPA ’06 § 1106(b) added § 414(f)(6) with respect to a multiemployer status election. Section 6611(a)(2) and (b)(2) of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 amends § 414(f)(6). (2008 C. L.).
32. 414(v) : Section 414(v) of the Code was added by § 631 of EGTRRA (as amended by § 411(o) of JCWAA) to allow for catch-up contributions for individuals age 50 or older. (2004 C. L.).

published on July 8, 2003 (68 Fed. Reg. 40510). (2004 C. L.).

33. 414(w) : PPA ’06 § 902(d)(1) added § 414(w) with respect to eligible automatic contribution arrangements. (2008 C. L.).

amended § 414(w)(3), (5), and (6) respectively. (New).

with respect to eligible automatic contribution arrangements were published on February 24, 2009 (74 Fed. Reg. 8200). (New).

I.R.B. 391, provides information with respect to automatic contribution increases under automatic contribution arrangements. (New).

413, provides sample amendments that plan sponsors can use to add automatic contribution features to their plans. (New).

34. 415 :

amended by §§ 611(b) and 632

25. 411(b)(1) :

419, addresses (1) the application of the backloading provisions of § 411(b)(1)(A), (B), and (C) to defined benefit cash balance plans and (2) the use of a “greater of” formula in the instance of a conversion of a defined benefit pension plan to a cash balance plan, including limited § 7805(b) relief. (2008 C. L.).

26. 411(b)(5) : PPA ’06 § 701(b)(1) added § 411(b)(5) with respect to applicable defined benefit plans, such as cash balance plans, and special rules relating to age. ⁹ (2008 C. L.).

provides guidance regarding cash balance plans and other hybrid defined benefit plans. (2008 C. L.).

45, provides guidance regarding the partial termination of a defined contribution plan. (2007 C. L.).

28. 411(d)(6) :

v. Heinz, 124 S.Ct. 2230 (2004). (2005 C. L.).

C.B. 991, as modified by Rev. Proc. 2005–76, 2005–2 C.B. 1139. (2005 C. L.).

of the Final Regulations were published on August 9, 2006 (71 Fed. Reg. 45379) with respect to the interaction between the anti-cutback rules of § 411(d)(6) and the nonforfeitability requirements of § 411(a). (2006 C. L.).

directed the Secretary of the Trea

sury to issue regulations under § 411(d)(6)(B). (2005 C. L.).

ulations was published on August 12, 2005 (70 Fed. Reg. 47109). (2005 C. L.).

of the Final Regulations were published on August 9, 2006 (71 Fed. Reg. 45379) with respect to a utilization test. (2006 C. L.).

§ 411(d)(6)(E) of the Code were added by § 645 of EGTRRA to permit the elimination of certain optional forms of benefit under certain conditions. (2005 C. L.).

Q&A–2(e) of the Regulations was published on January 25, 2005 (70 Fed. Reg. 3475) to implement § 411(d)(6)(E). (2005 C. L.).

29. 412

546, provides guidance with respect to whether a qualified pension plan can be a § 412(i) plan if the plan holds life insurance contracts and annuity contracts for benefits at normal retirement age in excess of a participant’s benefits at normal retirement age under the plan. (2005 C. L.).

447, provides guidance with respect to restrictions placed on plan amendments following an employer’s election of an alternative deficit reduction contribution. (2005 C. L.).

30. 414(d) : PPA ’06 § 906(a)(1) added language to the definition of governmental plan in § 414(d) with respect to Indian tribal governments. (2008 C. L.).

772, provides transition relief for plans subject to PPA ’06 § 906. (2008 C. L.).

9 Proposed regulations under § 411(b)(5) were published on December 28, 2007 (72 Fed. Reg. 73680) and may be relied upon until final regulations are issued. Announcement 2009–82, 2009–48 I.R.B. 720, November 30, 2009, announces relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. Plan sponsors may rely on Ann. 2009–82 pending publication of the anticipated additional guidance described in the announcement. The Service will consider the requirements of § 411(b)(5) in its review of a Cycle E determination letter application only if the plan has been amended to meet those requirements.

December 28, 2009 979 2009–52 I.R.B.

36. 417 :

lations was published on July 16, 2003 (68 Fed. Reg. 41906) relating to retroactive annuity starting dates. (2005 C. L.).

§ 417(a)(3) were published on March 24, 2006 (71 Fed. Reg. 14798) regarding the disclosure of the relative value of optional forms of benefit. (2006 C. L.).

notice required to be provided under § 417 may be provided as much as 180 days before the annuity starting date. ¹⁰ (2008 C. L.).

395, provides guidance regarding PPA ’06 § 1102. (2008 C. L.).

plicable interest rate and mortality table to be used for determining the present value of lump sum distributions in § 417(e)(3). (2008 C. L.).

C.B. 1047, addresses the mortality tables required by § 417(e)(3). (2008 C. L.).

638, provides guidance regarding PPA ’06 § 302. (2008 C. L.).

ified optional survivor annuity benefit to § 417. (2008 C. L.).

638, provides guidance regarding PPA ’06 § 1004. (2008 C. L.).

37. 420 :

Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, amends § 420(c)(3)(A) regarding minimum cost requirements for transfers of

of EGTRRA (as amended by § 411(p) of JCWAA) to increase the maximum annual additions permitted to the lesser of $40,000 or 100% of compensation. (2004 C. L.).

C.B. 925, provided that “compensation” within the meaning of § 415(c) could in certain situations include “deemed § 125 compensation”. (2004 C. L.).

was amended by § 611 of EGTRRA to increase the dollar limit and change the age when the limit is reduced or increased. (2005 C. L.).

the Code was amended by § 101(b)(4) of PFEA to fix the percentage at 5.5%. (2005 C. L.).

C.B. 879, provides the actuarial assumptions that must be used for distributions with annuity starting dates occurring during the plan years beginning in 2004 and 2005. (2005 C. L.).

the deadline to adopt PFEA amendments from the end of the 2008 plan year to the end of the 2009 plan year. (New).

Code was amended by § 303 of PPA ’06 regarding the interest rate assumption for applying benefit limitations to lump sum distributions. (2008 C. L.).

§ 415(b)(3) to eliminate the active participant restriction from the “average compensa

tion for high 3 years” definition. (2008 C. L.).

(B) modified §§ 415(b)(2)(H) and 415(b)(10), respectively, regarding Indian tribal governments. (2008 C. L.).

§ 415(b)(11) to remove the 100% of compensation limitation for a church plan participant if the participant has never been a highly compensated employee of the church. (2008 C. L.).

were published on April 5, 2007 (72 Fed. Reg. 16878). (2006 C. L.).

amended § 415(b)(2)(E)(v). (New).

35. 416 :

amended by § 613 of EGTRRA (as amended by § 411(k) of JCWAA) to make several changes to the top-heavy rules. (2004 C. L.).

Code was added by § 613(d) of EGTRRA to provide certain safe harbor § 401(k) plans and § 401(m) plans an exemption from the top-heavy rules. (2004 C. L.).

Code was amended by § 613(e) of EGTRRA (as amended by § 411(k)(1) of JCWAA) to provide when a frozen defined benefit plan is exempt from the minimum benefit requirements. (2005 C. L.).

§ 416(g)(4)(H)(i) by inserting § 401(k)(13) of the Code. (2008 C. L.).

§ 416(g)(4)(H)(ii) by inserting § 401(m)(12) of the Code. (2008 C. L.).

10 Proposed regulations under § 417 were published on October 9, 2008 (73 Fed. Reg. 59575) and may be relied upon until final regulations are issued.

2009–52 I.R.B. 980 December 28, 2009

2002–21 relating to relief provided for certain defined contribution plans maintained by professional employer organizations. (2004 C. L.).

484, provides guidance with respect to charging administrative expenses to former and current employees. (2004 C. L.).

478, provides guidance with respect to the distribution restrictions applicable to rollover contributions. (2004 C. L.).

632, provides guidance with respect to the mortality table under § 415(b)(2)(E)(v) of the Code and the applicable mortality table under § 417(e)(3)(A)(ii)(I) of the Code. (2005 C. L.).

285, provides guidance with respect to satisfying the nondiscrimination rules under § 401(a)(4) of the Code and the minimum coverage requirements under § 410(b) of the Code when applying the increased compensation limit to former employees. (2005 C. L.).

284, provides guidance with respect to medical reimbursement accounts under a profit sharing plan. (2005 C. L.).

nal Regulations was published on October 20, 2006 (71 Fed. Reg. 61877) setting forth standards for the use of an electronic medium to provide applicable notices to recipients or to make participant elections. (2006 C. L.).

431, provides transitional guidance for 2008 under § 436 for small plans with end-of-year valuation dates. (2008 C. L.).

717, expands transition relief of Notice 2008–21. (2008 C. L.).

I.R.B. 395, provides guidance with respect to annual paid time off contributions. (New).

excess pension assets to retiree health accounts. (2007 C. L.).

the definition of the term “excess pension assets” in § 420(e)(2). Section 6612(b) of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, amends § 420(e)(2)(B). (2007 C. L.).

38. 432 : PPA ’06 § 212(a) added § 432 which requires that a funding improvement plan or a rehabilitation plan be adopted for multiemployer plans in endangered or critical status and provides for certain benefit reductions. ¹¹ (2008 C. L.).

rary delay of designation of multiemployer plans in endangered or critical status. (New).

I.R.B. 856, as modified by Notice 2009–42, 2009–20 I.R.B. 1011, provides election and notice procedures for multiemployer plans under WRERA § 204. (New).

I.R.B. 460, provides procedures with respect to the revocation of elections by multiemployer plans to freeze funded status under WRERA § 204. (New).

rary extension of the funding improvement or rehabilitation periods for multiemployer plans in endangered or critical status for 2008 or 2009. (New).

I.R.B. 856, as modified by Notice 2009–42, 2009–20 I.R.B. 1011, provides election and notice procedures for multiemployer plans under WRERA § 205. (New).

39. 4975 :

amended by § 612 of EGTRRA to

allow plan loans for Subchapter S shareholder-employees. (2004 C. L.).

amended by § 240 of AJCA to allow an S corporation distribution on allocated shares to pay off an exempt loan as long as equal amounts are allocated to participant accounts. (2005 C. L.).

40. Hurricane Relief :

2005, Pub. L. 109–135, added § 1400M and § 1400Q to the Code to provide certain tax benefits to those areas affected by Hurricanes Katrina, Wilma, and Rita. (2006 C. L.).

930, provides relief in connection with certain employee benefit plans because of damage caused by Hurricane Ike. (New).

lization Act of 2008, Pub. L. 110–343, provides temporary tax relief for areas damaged by 2008 Midwestern severe storms, tornados, and flooding by applying § 1400Q and KETRA to any Midwestern disaster area. (New).

41. Miscellaneous :

76, provides guidance with respect to a situation where a money purchase pension plan is merged or converted into a profit sharing plan. (2004 C. L.).

911, provides guidance with respect to defined contribution retirement plans maintained by professional employer organizations. (2004 C. L.).

C.B. 1211, amplifies Rev. Proc.

11 Proposed regulations under § 432 were published on March 18, 2008 (73 Fed. Reg. 14417) and may be relied upon until final regulations are issued.

December 28, 2009 981 2009–52 I.R.B.

I.R.B. 398, provides guidance with respect to paid time off contributions at termination of employment. (New).

The following guidance contains sample or model amendments: Notice 2001–57, 2001–1 C.B. 279 (miscellaneous EGTRRA amendments); Rev. Rul. 2001–62, 2001–2 C.B. 632 (applicable mortality table); Rev. Proc. 2002–29, 2002–2 C.B. 1176 (required minimum distribution amendments); Rev. Proc. 2003–13, 2003–1 C.B. 317 (required language for deemed IRAs); Notice 2005–5 (automatic rollover); Notice 2006–44, 2006–1 C.B. 889 (Roth § 401(k) plans); and Notice 2009–65, 2009–39 I.R.B. 413 (automatic contribution features).

VII. HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008 PROVISIONS

As provided in section IV of this notice, a plan amendment made pursuant to section 104(a) or 105(b)(1) of the HEART Act generally may be retroactively effective, if, in addition to meeting the other applicable requirements, the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2010 (January 1, 2012 in the case of a governmental plan). While plans submitting in Cycle E must meet the amendment deadline for the HEART Act, if applicable, the Service will not consider the HEART Act in issuing determination letters because no guidance has been issued with respect to the HEART Act. The HEART Act provisions are listed below.

1. 401(a)(37) : Section 104(a) of the HEART Act added Code § 401(a)(37) with respect to benefits payable on the death of a plan participant while performing qualified military service. (2008 C. L.).
2. 414(u)(9) : Section 104(b) of the HEART Act amended § 414(u) of the Code by adding a paragraph regarding how a plan may provide benefit accruals for a person who dies or becomes disabled while performing qualified military service. (2008 C. L.).
3. 414(u)(12) : Section 105(b)(1) of the HEART Act added § 414(u)(12) with

respect to the treatment of differential wage payments during the period a person, while on active duty, is performing service in the uniformed services. (2008 C. L.).

VIII. WORKER, RETIREE, AND EMPLOYER RECOVERY ACT OF 2009 PROVISION

As provided in section V of this notice, a plan amendment made pursuant to WRERA section 201 generally may be retroactively effective, if, in addition to meeting the other applicable requirements, the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2011 (January 1, 2012 in the case of a governmental plan). The WRERA provision is listed below.

1. 401(a)(9)(H) : Section 201(a) of WRERA added § 401(a)(9)(H) which provides a suspension of the minimum distribution requirement for 2009 applicable to defined contribution plans. (New).

491, provides guidance relating to the suspension of the minimum distribution requirement for 2009 applicable to defined contribution plans. (New).

DRAFTING INFORMATION

The principal author of this notice is Angelique Carrington of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans taxpayer assistance answering service at 1–877–829–5500 (a toll free number) or e-mail Ms. Carrington at RetirementPlanQuestions@irs.gov .

26 CFR 601.201: Rulings and determination letters. (Also Part I, Sections 846; 1.846–1.)

Rev. Proc. 2009–55