n-05-101.pdf

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Part III – Administrative, Procedural and Miscellaneous

2005 Cumulative List of Changes in Plan Qualification Requirements

Notice 2005-101

I. PURPOSE

This notice contains the 2005 Cumulative List of Changes in Plan Qualification
Requirements (2005 Cumulative List) described in section 4 of Rev. Proc. 2005-
66, 2005-37 I.R.B. 509. The 2005 Cumulative List is to be used primarily by plan
sponsors of individually designed plans that fall in Cycle A. Those will be single
employer individually designed defined contribution plans, including employee
stock ownership plans (ESOPs), and individually designed defined benefit plans.

The 2005 Cumulative List in section 4 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. 2005-66.

II. BACKGROUND

Rev. Proc. 2005-66 sets forth procedures for issuing opinion, advisory, and
determination letters and establishes 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. 2005-66 provides the
deadline for timely adoption of an interim amendment or discretionary
amendment. Notice 2005-95, 2005-51 I.R.B. (December 19, 2005) provides
transitional relief relating to deadlines that would otherwise apply under Rev.
Proc. 2005-66.

Under section 4 of Rev. Proc. 2005-66, 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 plan sponsor’s submissions to the
Service for opinion, advisory and determination letters whose remedial
amendment period begins on February 1st following issuance of the Cumulative
List.

In Notice 2004-84, 2004-2 C.B. 1030, the Service published the 2004 Cumulative
List of Changes in Plan Qualification Requirements (2004 Cumulative List). The
2004 Cumulative List was used primarily by plan sponsors and practitioners in
drafting defined contribution pre-approved plans (that is, defined contribution

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plans that are master and prototype or volume submitter plans) that must be
submitted to the Service for review by January 31, 2006. Thus, the 2004
Cumulative List set forth only those plan qualification requirements that applied to
defined contribution pre-approved plans. Plan qualification requirements
included statutory changes and guidance that became effective after December
31, 2001 and any relevant qualification requirements not contained in the 2004
Cumulative List. The Service also stated that plan language for guidance issued
after December 14, 2004 would not be reviewed, unless it was on the 2004
Cumulative List.

III. APPLICATION OF 2005 CUMULATIVE LIST

This notice is being issued in conjunction with the opening of the Economic
Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16 (EGTRRA)
determination letter program for individually designed plans. The Service
announced the opening of the initial five-year remedial amendment cycle for
Cycle A in Rev. Proc. 2005-66. Thus, the Service will start accepting
determination letter applications for Cycle A individually designed plans (i.e., the
last digit of the plan sponsor’s employer identification number is 1 or 6) on
February 1, 2006. The 12-month submission period for individually designed
plans is intended to end January 31, 2007.

The 2005 Cumulative List informs plan sponsors of issues the Service has
specifically identified for review in determining whether an individually designed
plan has been properly updated. Specifically, the 2005 Cumulative List reflects
law changes under EGTRRA (with technical corrections made by the Job
Creation and Worker Assistance Act of 2002 (JCWAA), Pub. L. 104-147), the
Pension Funding Equity Act of 2004 (PFEA), Pub. L. 108-218, and the American
Jobs Creation Act of 2004 (AJCA), Pub. L. 108-357. In order to be qualified, a
plan must comply with all relevant qualification requirements (that is, all
qualification requirements in effect, or guidance published before the issuance of
the Cumulative List), not just those on the 2005 Cumulative List. The only two
items on the 2005 Cumulative List that are not yet published are listed under
section 402A.

The Service will not review plan language for any qualification change that
becomes effective, any guidance published, or any statutes enacted after
December 13, 2005, unless it is on the 2005 Cumulative List. Thus, plan
sponsors of individually designed plans may not rely on determination letters with
respect to plan language reflecting any guidance issued after December 13,
2005, unless that guidance is on the 2005 Cumulative List.

IV. 2005 CUMULATIVE LIST OF CHANGES IN PLAN QUALIFICATION
REQUIREMENTS

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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 2004 Cumulative List as “(New)”. The 2005 Cumulative
List adds statutory changes and guidance that have become effective after
December 31, 2001 for defined benefit plans and ESOPs. It is also updated for
plan qualification requirements published in 2005 for defined contribution plans.
Thus, the 2005 Cumulative List contains those plan qualification requirements
first listed in the 2004 Cumulative List as well as additional 2005 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).

2. 401(a)(4)
:
• Amendments to § 1.401(a)(4)-8 of the Regulations relating to new
comparability plans were published on June 29, 2001 (66 Fed. Reg.
34535).
• Rev. Rul. 2001-30, 2001-2 C.B. 46.
• Amendments to § 1.401(a)(4)-9 of the Regulations relating to new
comparability plans were published on June 29, 2001 (66 Fed. Reg.
34535). (New).
• Rev. Rul. 2004-21, 2004-1 C.B. 544. (New)

3. 401(a)(9):
• Sections 1.401(a)(9)-1 through –9 of the Regulations were published
on April 17, 2002 and June 15, 2004 (67 Fed. Reg. 18834 and 69
Fed. Reg. 33288).

4. 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.
• Notice 2001-56, 2001-2 C.B. 277.

5. 401(a)(31):
• Section 401(a)(31) was amended by § 643(b) of EGTRRA to allow
employees’ after-tax contributions to be rolled over under certain
circumstances.
• Section 401(a)(31)(B) was 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.
• Notice 2005-5, 2005-3 I.R.B. 337.
• Sections 641, 642 and 643 of EGTRRA (as amended by § 411(q) of
JCWAA) amended the definition of eligible retirement plan in § 402
to include a § 403(b) annuity contract and eligible governmental §
457(b) plan.

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• Section 636(b) of EGTRRA modified the definition of eligible rollover
distribution to exclude hardship distributions.

6. 401(k) & 401(m):
• Section 401(k)(2) and § 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.
• Notice 2002-4, 2002-1 C.B. 298.
• Section 636(a) of EGTRRA directed 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.
• Notice 2001-56.
• Notice 2002-4.
• Section 401(k)(11) of the Code was amended by § 611(f) of
EGTRRA to increase the maximum amount of qualified salary
reduction contributions that can be made to SIMPLE 401(k) plans.
• Section 402(g) of the Code was amended by § 611(d) of EGTRRA
to increase the applicable dollar amount.
• Section 401(m)(9) of the Code was amended by § 666 of EGTRRA
to eliminate the multiple use test.
• Final Regulations under § 401(k) and § 401(m) of the Code were
published on December 29, 2004 (69 Fed. Reg. 78144).

7. 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.
• Final Regulations under § 401(k) and § 401(m) of the Code relating
to designated Roth contributions are expected to be published soon.
• Proposed Regulations under § 402A are expected to be published
soon.

8. 404
:
•
•
404(k)(2)(A) of the 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. (New).
Notice 2002-2, 2002-1 C.B. 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. (New).

9. 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.

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• Section 1.408(q)-(e)(8)(T) of the Regulations was published on July
22, 2004 (69 Fed. Reg. 43735).

10. 409: Section 409(p) of the Code was added § 656 of EGTRRA relating to
restrictions on the allocation of employer securities in an ESOP
maintained by an S corporation. (New).
•
•
•
•
•
Section 1.409(p)-1T of the Regulations was published on July 21,
2003 (68 Fed. Reg. 42970). (New).
Section 1.409(p)-1T of the Regulations was published on December
17, 2004 (69 Fed. Reg. 75455). (New).
Rev. Proc. 2003-23, 2003-1 C.B. 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). (New).
Rev. Rul. 2003-6, 2003-1 C.B. 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.
(New).
Rev. Rul. 2004-4, 2004-1 C.B. 414 provides guidance relating to
synthetic equity owned by a disqualified person in a nonallocation
year of an ESOP maintained by an S corporation. (New).

11. 411(a)
:
• Section 411(a) of the Code was amended by § 633 of EGTRRA (as
amended by § 411(o) of JCWAA) to provide for faster vesting of
matching contributions.
• Rev. Rul. 2003-65, 2003-1 C.B. 1035. (New).

12. 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.

13. 411(d)(6)
:
•
•
•
Central Laborers’ Pension Fund v. Heinz, 124 S.Ct. 2230 (2004).
(New).
• Rev. Proc. 2005-23, 2005-18 I.R.B. 991 as modified by Rev.
Proc. 2005-76, 2005-50 I.R.B. (December 12, 2005). (New).
Section 411(d)(6)(D) and § 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. (New).
• Section 1.411(d)-4, Q&A-2(e) of the Regulations was published
on January 25, 2005 (70 Fed. Reg. 3475) to implement §
411(d)(6)(E). (New).
Section 645(b)(3) of EGTRRA directed the Secretary of the Treasury
to issue regulations under § 411(d)(6). (New).

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• Section 1.411(d)-3 of the Regulations was published on August
12, 2005 (70 Fed. Reg. 47109). (New).

14. 412:
• Rev. Rul. 2004-20, 2004-1 C.B. 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. (New).
• Notice 2004-59, 2004-2 C.B. 447 provides guidance with respect to
restrictions placed on plan amendments following an employer’s
election of an alternative deficit reduction contribution. (New).

15. 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.
• Regulations under § 1.414(v) were published on July 8, 2003 (68
Fed. Reg. 40510).
• Notice 2002-4.

16. 415
:
• Section 415(b) of the Code was amended by § 611 of EGTRRA to
increase the dollar limit and change the age when the limit is
reduced or increased. (New).
•
•
Rev. Rul. 2001-51, 2001-2 C.B. 427.
• Section 415(b)(2)(E)(ii) of the Code was amended by § 101(b)(4) of
PFEA to fix the percentage at 5.50%. (New).
• Notice 2004-78, 2004-2 C.B. 879 provides the actuarial
assumptions that must be used for distributions with annuity
starting dates occurring during the plans years beginning in
2004 and 2005. (New).
• Section 415(c) of the Code was amended by §§ 611(b) and 632 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.
• Rev. Rul. 2001-51, 2001-2 C.B. 427.
• Section 1.415(c)-2(e) of the Proposed Regulations under § 415 was
published on May 31, 2005 (70 Fed. Reg. 31214).
Rev. Rul. 2002-27, 2002-1 C.B. 925 provided that “compensation”
within the meaning of § 415(c) could in certain situations include
“deemed § 125 compensation”.

17. 416
: Section 416 of the Code was amended by § 613 of EGTRRA (as
amended by § 411(k) of JCWAA) to make several changes to the top-
heavy rules.

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• Section 416(g)(4)(H) of the 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.
• Rev. Rul. 2004-13, 2004-1 C.B. 485.
• Section 416(c)(1)(C) of the 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. (New).

18. 417
: Section 1.417(e)-1 of the Regulations was published on July 16,
2003 (68 Fed. Reg. 41906) relating to retroactive annuity starting date.
(New).

19. 4975
:
• Section 4975 of the Code was amended by § 612 of EGTRRA to
allow plan loans for Subchapter S shareholder-employees.
• Section 4975(f) of the Code was 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. (New).

20. Katrina Relief
:
• Katrina Emergency Tax Relief Act of 2005, P.L. 109-73. (New).
• Notice 2005-92, 2005-51 I.R.B. (December 19, 2005). (New).
• Announcement 2005-70, 2005-40 I.R.B. 682. (New).

21. Miscellaneous
• Rev. Rul. 2001-62, 2001-2 C.B. 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.
(New).
• Rev. Rul. 2002-42, 2002-1 C.B. 76, provides guidance with respect
to a situation where a money purchase pension plan is merged or
converted into a profit sharing plan.
• Rev. Proc. 2002-21, 2002-1 C.B. 911, provides guidance with
respect to defined contribution retirement plans maintained by
professional employer organizations.
• Rev. Proc. 2003-86, 2003-2 C.B. 1211, amplifies Rev. Proc. 2002-21
relating to relief provided for certain defined contribution plans
maintained by professional employer organizations.

• Rev. Rul. 2003-11, 2003-1 C.B. 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. (New).

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• Rev. Rul. 2004-10, 2004-1 C.B. 484, provides guidance with respect
to charging administrative expenses to former and current
employees.
• Rev. Rul. 2004-12, 2004-1 C.B. 478 provides guidance with respect
to the distribution restrictions applicable to rollover contributions.
• Rev. Rul. 2005-55, 2005-34 I.R.B. 284 provides guidance with
respect to medical reimbursement accounts under a profit sharing
plan. (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); and Notice 2005-5 (automatic
rollover).

DRAFTING INFORMATION

The principal author of this notice is Dana A. Barry of the Employee Plans, Tax
Exempt and Government Entities Division. For further information regarding this
notice, please contact the Employee Plans’ taxpayer assistance telephone
service at 1-877-829-5500 (a toll-free number) between the hours of 8:00 a.m.
and 6:30 p.m. Eastern Time, Monday through Friday (a toll free call). Ms. Barry
may be reached at (202) 283-9888 (not a toll-free call).