It is the date by which DB sponsors may revoke a previous election to use a funding balance to offset minimum required contributions for the 2012 plan year—to the extent the election exceeded the full minimum required contribution for the year. (This deadline only applies to plans with valuation dates as of the first day of the plan year.) It is also the date by which they must elect to reduce January 1, 2012 funding balances to avoid or lift benefit restrictions under IRC Section 436 for single-employer defined benefit plans (see “IRS Provides Sample Plan Amendment for Underfunded Pension Plan Limitations”).
In addition, the passage of the Moving Ahead for Progress in the 21st Century Act (MAP-21) in June affects funding decisions for DB sponsors (see “Congress Passes Bill with Pension Funding Relief”). By December 31, they may elect to restore their plan’s funding balances if a reduction that was made before applying MAP-21 rates is no longer necessary (if the original election was made on or before September 30, 2012). They may also recertify a single-employer defined benefit plan’s 2012 adjusted funding target attainment percentage (AFTAP) if it had previously been certified using pre-MAP-21 rates on or before September 30, 2012, if the sponsor’s decision to apply the MAP-21 rates prospectively would otherwise cause a “material” change in the AFTAP.
More deadlines and helpful information can be found in the Internal Revenue Service’s (IRS) Retirement News for Employers Fall 2012 Edition at http://www.irs.gov/Retirement-Plans/Retirement-News-for-Employers.