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.
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.
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.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.