On the day before Thanksgiving, the IRS announced that it is extending the deadline for adopting plan amendments for funding-related benefit restrictions under defined benefit plans. For most calendar year plans, the new deadline is December 31, 2013. (Our list of upcoming benefits and compensation related deadlines is available here.)
Although the amendment deadline has been extended, the funding-related benefit restrictions have been in effect since January 1, 2008. The restrictions affect a plan’s ability to make lump-sum payments and provide certain other benefits if the plan’s funding percentage (referred to as the adjusted funding target attainment percentage, or “AFTAP”) falls below 80 percent.
The IRS continues to take the position that detailed plan language (rather than a more simple reference to the relevant statute and regulations) is required to comply with the tax-qualification requirements. The IRS issued model language at the end of 2011. The IRS has not shown any intention to change its model language or to back away from the requirement to include detailed language in plan documents.