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Rev. Proc. 2020-9: Extended deadline, plan amendments and hardship distributions

Rev. Proc. 2020-9: Extended deadline, plan amendments

The IRS today released an advance version of Rev. Proc 2020-9 to clarify which amendments are treated as integral to a plan provision that fails to satisfy certain qualification requirements by reason of a change to those requirements made by September 2019 regulations under sections 401(k) and 401(m) relating to hardship distributions of elective deferrals.

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Rev. Proc. 2020-9 [PDF 43 KB] also extends the deadline—applicable to pre-approved plans—for adopting an interim amendment relating to the regulations. The deadline is extended to December 31, 2021. 

Summary

Prior revenue procedures established a six-year remedial amendment cycle system for pre-approved plans. Under this system, a pre-approved plan provider could apply for a new opinion letter from the IRS once during each six-year remedial amendment cycle. In general, the adoption of an interim amendment generally would be required, and the requirement for interim amendments did not apply to individually designed plans.

Final regulations under sections 401(k) and 401(m) (published in September 2019) state that many plans’ hardship distribution provisions will need to be amended to reflect certain provisions of these regulations—in particular with regard to a plan’s hardship distribution provisions. Read TaxNewsFlash

Rev. Proc. 2020-9 released today clarifies which amendments are treated as integral to a plan provision that fails to satisfy the final regulations and extends the plan amendment deadline. All plan amendments that relate to a plan’s hardship distribution provisions and that are effective no later than January 1, 2020, are treated as integral to the required amendments under today’s revenue procedure. This treatment applies even if the required amendments are implemented earlier than for hardship distributions made on or after January 1, 2020.

Rev. Proc. 2020-9, thereby, provides the deadline for adopting interim amendments is extended to December 31, 2021. 

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