IRS Extends Date for Reforming Amendments Related to Anti-Cutback Case

November 23, 2005 ( - The IRS has extended the deadline when plans must be in compliance with their reforming amendments relating to providing payments of retroactive benefits to plan participants who accrued benefits prior to the effective date of an original plan amendment.

According to the IRS  RP-2005-76 , RP-2005-23 provides that a qualified plan will not be disqualified merely because an amendment that was adopted before June 7, 2004, violated the Employee Retirement Income Security Act’s (ERISA) anti-cutback rule by adding or expanding a provision under which a suspension of benefits occurs (See   IRS Issues Guidance on Anti-Cutback Case Enforcement  and   IRS Issues Proposed Regs on Anti-Cutback Rules ).   This treatment applies only if a reforming amendment is adopted and the plan complies operationally with the reforming amendment.

Originally, employers were required to be in compliance with the reforming amendment by January 1, 2006.   The new revenue procedure extends that date to January 1, 2007.

The original guidance was issued after a 2004 Supreme Court decision in Central Laborer’s Pension Fund v. Heinz.   In that case the Supreme Court reinstated two construction workers’ pension benefits after a plan amendment caused the administrator to suspend their payments (See  Pension Fund Violated ERISA’s Anti-Cutback Rule ).