(b)lines Ask the Experts – Amending Plans for the HEART Act

David Levine, Groom Law Group, answers:    

Luckily, the IRS took the position in Announcement 2009-89 that amendments for a 403(b) plan that (1) adopted a plan document by December 31, 2009, and (2) adopts a plan document that receives an opinion letter using the IRS’ upcoming determination letter program or applies for a determination letter will be able to retroactively amend its plans for compliance with laws like the HEART Act, so an amendment will still be timely if adopted in 2011.    

If a plan does not qualify for this IRS relief it is expected that the upcoming update to the Employee Plans Compliance Resolution System (EPCRS) will allow sponsors to pay a user fee (potentially as low as $375) to correct by retroactively adopting a HEART Act amendment.   

The HEART Act contains provisions relating to treatment of differential pay in pension calculations, in-service withdrawals to active duty military members, and benefits for beneficiaries of deceased military members (see IRS Provides Guidance on HEART Act).  

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.