SECTION 2. BACKGROUND

.01 Section 401(b) 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 7805(b)(1) provides that, except as otherwise provided, no temporary, proposed, or final regulation relating to the internal revenue laws shall apply to any taxable period ending before the earliest of the following dates: (i) the date on which such regulation is filed with the Federal Register; (ii) in the case of any final regulation, the date on which any proposed or temporary regulation to which such final regulation relates was filed with the Federal Register; or (iii) the date on which any notice substantially describing the expected contents of any temporary, proposed, or final regulation is issued to the public.

.03 Section 7805(b)(8) provides that the Secretary may prescribe the extent, if any, to which any ruling (including any judicial decision or any administrative determination other than by regulation) relating to the internal revenue laws shall be applied without retroactive effect.

.04 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 that 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 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).

.05 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 (i) 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 (ii) the last day of the plan year in which the plan is put into effect. In the case of a new plan maintained by more than one employer, the remedial amendment period ends on 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.

.06 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 (i) the due date (including extensions) for filing the employer’s tax return for the taxable year in which the amendment is adopted or effec

tive (whichever is later); or (ii) 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 remedial amendment period ends on 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).

.07 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: (i) 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 (ii) the last day of the plan year that includes the date on which the remedial amendment period begins. In the case of a plan maintained by more than one employer the remedial amendment period ends on the last day of the tenth month following the last day of the plan year in which the remedial amendment period begins.

.08 Section 1.401(b)–1(f) provides that the Commissioner has discretion to extend the remedial amendment period.

.09 Rev. Proc. 2007–44 sets forth rules and procedures for a system of cyclical remedial amendment periods under § 401(b) for individually designed plans and for a system of cyclical remedial amendment periods under § 401(b) for pre-approved qualified plans, including the following:

(1) Section 4.01 provides that the IRS intends to publish annually Cumulative Lists of Changes in Plan Qualification Requirements (Cumulative Lists). The Cumulative Lists are intended to identify, on a year-by-year basis, all changes in qualification requirements resulting from changes in statutes, or from regulations or other guidance published in the Internal Revenue Bulletin, that are required to be

Bulletin No. 2016–29 137 July 18, 2016

taken into account in the written plan document that is submitted to the IRS for an opinion, advisory, or determination letter, as applicable.

(2) Section 5.04 provides that when there are statutory or regulatory changes with respect to plan qualification requirements that will impact provisions of the written plan document, the adoption of an interim amendment generally will be required.

(3) Section 9 generally provides that an individually designed plan’s five-year remedial amendment cycle (Cycle A, B, C, D, or E) is determined by reference to the last digit of the employer identification number (EIN) of the employer that sponsors the plan. However, Section 10.06 provides that, if more than one plan is maintained by members of a controlled group under § 414(b) or (c) or an affiliated service group under § 414(m), the employers may elect that the five-year remedial amendment cycle for all plans maintained by any members of the group (other than multiemployer plans under § 414(f), multiple employer plans, governmental plans under § 414(d), or certain jointly trusteed single employer collectively bargained plans) will be Cycle A. In general, the Cycle A election must be made jointly by all members of the controlled group or affiliated service group. However, in the case of a parent-subsidiary controlled group, this election may be made on behalf of all of the members by the parent.

(4) Section 10.08(1) provides that, in the case of a Cycle A election under section 10.06 that does not involve a parentsubsidiary controlled group, if a new member joins the controlled group, that member must make an election no later than one year from the date the new member joins the controlled group in order for other members to maintain the existing election.

(5) Section 13.02 provides that determination letters issued for individually designed plans will include a statement that the letter may not be relied on after the end of the plan’s first five-year remedial amendment cycle that ends more than 12 months after the application was received, and will include a specific “expiration date.”

.10 Notice 2010–90, 2010–52 I.R.B. 909, included the 2010 Cumulative List of

Changes in Plan Qualification Requirements, which contains qualification requirements for pre-approved defined contribution plans to be used for the second submission period under the six-year remedial amendment cycle and for certain single employer individually designed plans.

.11 Announcement 2012–3, 2012–4 I.R.B. 335, extended to April 2, 2012, the deadline to submit on-cycle applications for opinion and advisory letters for preapproved defined contribution plans for the plans’ second six-year remedial amendment cycle.

.12 In Announcement 2014–16, 2014–17 I.R.B. 983, the IRS announced it would issue opinion and advisory letters for pre-approved defined contribution plans that were restated for changes in plan qualification requirements listed in the 2010 Cumulative List and that were filed with the IRS during the plans’ second submission period under the remedial amendment cycle under Rev. Proc. 2007– 44. The announcement provided that employers using these pre-approved plan documents to restate a plan for the plan qualification requirements on the 2010 Cumulative List would be required to adopt the plan document by April 30, 2016, and that the IRS would accept applications for individual determination letters from employers under the second six-year remedial amendment cycle for pre-approved defined contribution plans starting May 1, 2014, and ending April 30, 2016. .13 Announcement 2014–41, 2014–52 I.R.B. 979, extended to June 30, 2015, the deadline for submitting on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans for the plans’ second six-year remedial amendment cycle, as previously extended in Announcement 2014–4, 2014–7 I.R.B. 523.

.14 Rev. Proc. 2015–36 provided rules for issuing opinion and advisory letters for pre-approved plans. This revenue procedure also extended to October 30, 2015, the deadline for submitting on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans for the plans’ second six-year remedial amendment cycle.

.15 Announcement 2015–19, 2015–32 I.R.B. 157, announced the elimination of

the five-year remedial amendment cycle system for individually designed plans and provided that the scope of the determination letter program for individually designed plans would be limited to determination letter applications for initial plan qualification, for qualification upon termination, and in certain other circumstances. This announcement also provided a transition rule with respect to the remedial amendment period for certain plans currently operating under the five-year remedial amendment cycle system, and announced that the IRS, as of July 21, 2015, would cease accepting off-cycle determination letter applications (as defined in section 14 of Rev. Proc. 2007–44), except with respect to new and terminating plans.

.16 Notice 2015–84 included the 2015 Cumulative List of Changes in Plan Qualification Requirements, which contains qualification requirements for single employer individually designed defined contribution plans and defined benefit plans, to be used primarily by plan sponsors of such plans that fall in Cycle A.

.17 Rev. Proc. 2016–6, 2016–1 I.R.B. 200, set forth the annual update of procedures for issuing determination letters on the qualified status of plans. Rev. Proc. 2016–6 provided that, effective as of January 4, 2016, determination letters issued to sponsors of individually designed plans would no longer contain an expiration date.

.18 Notice 2016–03, 2016–3 I.R.B. 278, announced that guidance will be issued to provide that: (i) controlled groups and affiliated service groups that have previously made a Cycle A election are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending January 31, 2017; (ii) expiration dates on determination letters issued prior to January 4, 2016, are no longer operative; and (iii) the period during which certain employers may, on or after January 1, 2016, establish or adopt a preapproved defined contribution plan and, if permissible, apply for a determination letter, is extended from April 30, 2016, to April 30, 2017.

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