IRS Extends Deadline for Certain Plan Amendments


The Internal Revenue Code was amended in 2006 as part of the Pension Protection Act to restrict the ability of a defined benefit plan to make lump sum and other forms of “accelerated payments,” unless the plan was adequately funded. All these rules generally became effective in 2008, but the Internal Revenue Service (the “IRS”) has consistently pushed off the date by which plans must be amended to reflect these new requirements.

On November 21, the IRS again postponed the deadline for making these so-called “Section 436” amendments. Defined benefit plans now must be amended to add these new restrictions, generally, by December 31, 2013 for plans with a calendar plan year. Special rules might further postpone this deadline.

These new rules apply only to defined benefit plans. Defined contribution plans (including Section 401(k) plans) are not subject to these requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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