The US Internal Revenue Service has just issued Notice 2009-97 (PDF), extending by one year the deadline to make certain required qualified plan amendments. The operative word here is “certain”. This is not a blanket extension of any amendments required by the Pension Protection Act (PPA) or the Worker, Retiree and Employer Recovery Act of 2008 (WRERA) that would otherwise have been required to be made to most plans by December 31 of this year. A careful reading of Notice 2009-97 indicates that the extension is available only for amendments that:

  • Comply with the funding-based benefit limitations that apply to defined benefit plans.
  • Apply certain of the new rules to cash balance and other hybrid plans.
  • Implement the diversification requirements for 401(k) and other defined contribution plans that invest in employer stock.

The reason for this extension is that the IRS expects to be issuing additional guidance on how to comply with these new requirements, but both defined contribution and defined benefit plans must make additional amendments that are not subject to the extension by the original deadline. These additional amendments include the new interest rates and mortality table used to calculate lump sums in defined benefit plans, new faster vesting for nonelective employer contributions to defined contribution plans, and new requirements to make a qualified optional survivor annuity option (usually a 75% survivor annuity) available.

Plan sponsors who have not yet adopted the PPA and WRERA amendments for which the deadline has not been extended still need to do so, generally before the end of this year. If they do not do so, they will be exposed to penalties under the IRS correction programs or on plan audit.