compliance alert

December 18, 2014

Year-End Compliance Deadlines for Retirement Plans

This Compliance Alert reminds employers that sponsor defined benefit (DB) and defined contribution (DC) plans, including multiple-employer plans, about some upcoming compliance deadlines.

Plan Amendments

Employers might need or wish to adopt amendments that:

  • Implement U.S. v. Windsor. If an amendment is needed to implement the U.S. Supreme Court’s June 26, 2013 decision in Windsor, the adoption deadline for calendar-year plans is December 31, 2014. The adoption deadline for non-calendar-year plans varies and is discussed in detail in Sibson’s May 1, 2014 Compliance Alert on the Windsor decision.1 Non-calendar-year plans that are Cycle D filers have to adopt an amendment no later than the Cycle D filing deadline (and may have to adopt by December 31, 2014 depending on the plan year).
  • Formalize discretionary plan changes. Under Internal Revenue Service (IRS) rules, discretionary plan amendments, such as amendments to reflect benefit improvements, plan mergers or other changes that are not required by law, generally must be adopted by the last day of the plan year in which they become effective. Calendar-year plans for which discretionary amendments were made with 2014 effective dates must have those amendments committed to writing and adopted (signed and dated) by December 31, 2014.
  • Adopt amendments related to prior determination letters. IRS determination letters require that a restatement or any amendments submitted for review in proposed form be adopted no later than 91 days after the date on which the determination letter was issued. The same 91-day adoption deadline applies to any amendments required by the IRS reviewer as a condition for receiving the determination letter. Plans that have recently received a favorable determination letter should ensure that any proposed documents were adopted by the deadline.
  • Facilitate validation of rollovers.  For plans that accept rollover contributions, the plan administrator must be able to reasonably conclude that a rollover is a valid rollover contribution before it can be accepted. If the administrator accepts a rollover and later determines that the rollover was not valid, the contribution and earnings must be distributed to the employee within a reasonable time. The IRS has provided guidance intended to facilitate rollovers by making it easier for plan administrators to determine that certain rollover contributions are valid.2 Employers might wish to review their plans (and related procedures) to determine if an amendment is necessary or desirable in order to take advantage of the IRS guidance.

Determination Letters

Cycle D applies to single-employer plans sponsored by an employer with an Employer Identification Number (EIN) ending in 4 or 9. Under recent guidance, Cycle D submissions are due two days later: on or before February 2, 2015.

If an employer’s EIN ends in a 5 or 0, the plan’s determination letter cycle is Cycle E. Cycle E will open February 1, 2015, and continue to January 31, 2016.3

Special Reminders

Employers are reminded about the following compliance issues:

  • Required Minimum Distributions (RMDs) For participants who attain age 70½ in 2014, payment of the required minimum distribution must begin on or before April 1, 2015 — unless the DC or DB plan provides that distributions will be delayed until April 1 of the calendar year following the year of the participant’s termination of employment, if later.
  • Safe-Harbor Notices on Taxation of Eligible Rollover Distributions The model Section 402(f) Notices have been amended to address revised rules on the taxation of eligible rollover distributions from DC or DB plans and to make various other updates and corrections.4 While most of the revisions relate to the allocation of pre-tax and after-tax amounts (including Roth after-tax amounts) when there are distributions from a plan that are made to multiple destinations at the same time, all plans should review the new models in order to incorporate the generally applicable updates and corrections into their own notices.
  • DB Hybrid Plan Regulations5 Generally, the new final regulations identify the interest rates that will be considered acceptable as a “market rate of return” for the purpose of interest credits under lump-sum based hybrid plans such as cash balance plans. These regulations apply for plan years beginning on or after January 1, 2016, and amendments are required by the last day of the 2015 plan year. Proposed regulations specifying how plans can correct interest crediting rates that do not satisfy the new regulations were issued at the same time. Employers might wish to begin reviewing their hybrid plans to see if any changes are necessary or desirable.
  • DB Plan Funding Stabilization The Highway and Transportation Funding Act (HATFA), which was signed into law on August 8, 2014, changed the “corridors” that define the interest rates used to calculate the cost for funding DB plans.6 HATFA provides employers sponsoring single-employer DB plans with a number of elections with regard to the application of the new rules for the 2013 plan year. Calendar-year plans (and some other plans) must make those elections by December 31, 2014.
  • DC Plan Investment Option Comparative Disclosure Charts DC plans with participant-directed investments are required to provide participants on an annual basis with detailed charts that compare the features (including fees) of the plan’s investment options. The deadline for providing the first chart was August 30, 2012, and the timing of subsequent charts was keyed to 12-month periods after the date of the first chart. To permit plans to distribute the chart on the same schedule as other annual disclosures (generally keyed to plan years), the Department of Labor allowed plans to “reset” the distribution date for this chart for either the 2013 or the 2014 plan year. Plans that chose to reset for the 2014 plan year have until February 25, 2015 to distribute their 2014 charts.7

• • •

As with all issues involving the interpretation or application of laws and regulations, employers should rely on counsel for authoritative advice related to the timing and content of amendments, government filings, plan disclosures, and other compliance issues. Sibson Consulting can be retained to work with employers and their attorneys on these issues.


1 For more information on required and permitted Windsor amendments, including information related to plans subject to benefit improvement restrictions, see Sibson Consulting’s May 1, 2014 Compliance Alert, “Qualified Retirement Plans Required to Apply United States v. Windsor Prospectively from Date of Decision.” (Return to the Compliance Alert.)

2 Rev. Rul. 2014-9 is on the IRS website. (Return to the Compliance Alert.)

3 The 2014 Cumulative list, IRS Notice 2014-77 is available on the IRD website. (Return to the Compliance Alert.)

4 See Notice 2014-74 on the IRS website. Two model Section 402(f) Notices are provided, one for distributions that do not include Roth amounts, the other for distributions of Roth amounts. (Return to the Compliance Alert.)

5 See the September 19, 2014 Federal Register. (Return to the Compliance Alert.)

6 See section 2003 of Pub. L. No. 113-159 (2014) and Notice 2014-53, which is on the IRS website. (Return to the Compliance Alert.)

7 DOL EBSA Field Assistance Bulletin 2013-2 is on the DOL website. (Return to the Compliance Alert.)


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