2007 Amendments 11/13/2007 2007 Interim and Discretionary - PDF document

2007 Amendments 11/13/2007 2007 Interim and Discretionary Amendments Presented by Carmen Moore PPA ‘06 � Employers are not required to amend their plan to meet interim or discretionary PPA ’06 requirements until the first plan year beginning on or after January 1, 2009. � If the plan is terminating the plan must adopt PPA ’06 changes that were in effect on or before the date of plan termination. PPA ’06 SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS. (a) In General- If this section applies to any pension plan or contract amendment-- (1) such pension plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A), and (2) except as provided by the Secretary of the Treasury, such pension plan shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 by reason of such amendment. (c) 2007 DATAIR 1

2007 Amendments 11/13/2007 PPA ‘06 (b) Amendments to Which Section Applies- (1) IN GENERAL- This section shall apply to any amendment to any pension plan or annuity contract which is made-- (A) pursuant to any amendment made by this Act or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under this Act, and (B) on or before the last day of the first plan year beginning on or after January 1, 2009. Normal Retirement Age (§401(a)) � Notice 2007-69 – Definition of Normal Retirement Age: NRA cannot be lower than what is reasonable for the industry in which the workforce is covered. – NRA of 62 or later is ok � DATAIR Amendment states NRA does not change from what is currently in the plan. Normal Retirement Age (cont.) � NRA Requirements – If NRA is 62 or later- NRA meets the requirements. – If NRA is between 55 and 62-NRA might meet requirements. Based on facts and circumstances, plan sponsor can offer a good faith opinion on NRA. – If NRA is age 55 or earlier- NRA does not meet requirements. IRS will determine on a facts and circumstances basis. (c) 2007 DATAIR 2

2007 Amendments 11/13/2007 Final 415 Regulations � Post Severance Compensation 415(c)(3) – DATAIR definition includes pay the employee would have been entitled to: Bonuses, Commissions, pay for actual time worked, etc. – Optional to include sick, vacation, non-deferred comp, military and certain pay to disabled participants. Vesting (§1.411(d)-3) � Amending vesting schedule – Anti-cut back rules (§411(d)(6)) – Nonforfeitablity requirements (§411(a)) � Any change to the vesting schedule cannot reduce a Participant’s accrued vesting. � Participant shall vest under the better schedule for future benefits. (Blended schedule if necessary.) Additional Changes � 415 Excess Annual Additions correction options-Removed from plan now part of EPCRS � Restorative Payments- Are not included in Annual Additions for any Limitation Year. � Reversion Upon Termination for DC plans- Excess amounts are returned to Employer (c) 2007 DATAIR 3

2007 Amendments 11/13/2007 Roth Elective Deferral Amendment � Final 402(A) regulations � Clarified Roth contributions are not included in the mandatory cash out threshold. � Clarified Roth rollover provisions � DATAIR added provision for Hardship distributions QUESTIONS? Don’t forget to fill our your survey. (c) 2007 DATAIR 4