IRS’ 2021 Required Amendments List Doesn’t Affect 401(k) Plans

On November 30, 2021, the Internal Revenue Service (“IRS”) released Notice 2021-64 its annual list of required amendments (“RA List”) for individually designed qualified retirement plans, including 401(k) plans.

  • This year, the RA List is notable in that, for perhaps the first time ever, it contains no provisions directly applicable to 401(k) plans.
  • Last year, as you may recall, the 2020 RA List contained only a single 401(k)-related provision – and that provision only affected a limited number of 401(k) plans (see our blog for details).

OBSERVATION: The absence of required amendments for 2021 is less an indication of governmental inactivity in the case of 401(k) plans as it is simply a reflection that much of the present-day activity does not require adopting plan amendments at this time. Accordingly, plan administrators should not be lulled into a sense of false security, assuming that 401(k) plans are no longer being monitored or regulated by the IRS and/or other governmental agencies. Furthermore, 401(k) plans may still need to be amended in response to prior RA Lists or for other reasons (see discussion below under “CAUTION: Other Plan Amendments May Still Be Required!).

DISCLAIMER: This article is intended as a general overview of the new IRS guidance issued on November 30th as it affects 401(k) plans and is not meant to address the details of plan qualification, plan amendments generally, defined benefit retirement plans, or previous or related IRS or other official guidance on this topic. As always, be sure to consult with your own ERISA attorney or other professional advisor for individualized advice with respect to your plan’s unique situation.

Background. The IRS issues RA Lists at the end of each calendar year to identify changes in the Internal Revenue Code’s qualification requirements that may require a “remedial” plan amendment to be made to an individually designed qualified retirement plan (such as a 401(k) plan) in order to avoid potential plan disqualification. The RA List is divided into two parts –

  • Part A covers changes in qualification requirements that generally would require an amendment to most plans (or to most plans that are affected by the change); whereas
  • Part B covers changes in qualification requirements that might require a plan amendment because of an unusual provision in a particular plan.

The RA List is geared toward remedial amendments made to individually designed plans, which are generally maintained and amended by the plan sponsor (or its legal counsel or ERISA consultant). Many 401(k) plans, however, are pre-approved plans (sometimes known as “master and prototype plans” or “volume submitter plans”), which generally must be amended and maintained by the preapproved plan vendor or supplier in accordance with a different timeframe. Generally, the plan sponsor in these cases need only sign onto the amendments which have already been prepared by the vendor or supplier. For more information on types of plan documents and plan amendments, see our article.

The 2021 RA List. For 2021, there is only one change identified in Part A, which affects only certain defined benefit plans. There are no changes at all identified in Part B.

CAUTION: Other Plan Amendments May Still Be Required! Although the 2021 RA List does not identify any required amendments for 401(k) plans, 401(k) sponsors may still need to amend their plans for other reasons. For example, amendments relating to the final hardship distribution regulations issued in September 2019 (see our article) which were included on the 2019 RA List (see our article) generally must be adopted by the end of this month – December 31, 2021.

Furthermore, RA Lists do not take into account any discretionary plan amendments that a 401(k) plan sponsor may wish to make (for example, non-required amendments modifying the plan’s entry date requirements, or adding a new distribution option), which generally must be adopted by the end of the plan year in which the discretionary plan changes are made effective.

The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. As always, for specific questions concerning your 401(k)-retirement plan, or for help in operating your plan during the current COVID-19 crisis, please consult your own ERISA attorney or professional advisor.

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