Year-End Plan Amendment Requirements – Actions That Can Be Taken Now

By on November 19, 2010

by Joseph S. Adams, Raymond M. Fernando, Nancy S. Gerrie, Amy M. Gordon, Andrew C. Liazos, Susan M. Nash, Brian A. Benko, Kay Kemp, and Joanna Kerpen,

With the end of 2010 fast approaching, employers should take time to review their employee benefit plans and assess whether any actions, such as adopting plan amendments and implementing administrative changes, must be taken before December 31, 2010.  Discussed below is a sample of the types of amendments or changes that may be required under various types of employee benefit plans.

For 2010, employers should review their qualified defined contribution plans for compliance with the HEART Act, new diversification regulations with respect to employer securities, waiver of required minimum distributions for 2009, and non-spouse beneficiary direct rollovers.  Employers should also review their qualified defined benefit plans for compliance with the HEART Act, non-spousal beneficiary direct rollovers, PPA benefit restriction requirements and, for certain hybrid defined benefit plans (e.g., cash balance and pension equity formulas), the new final regulations.  Also, employers that are Cycle E filers (that is, an EIN that ends in 5 or 0) should submit a determination letter request by January 31, 2011.

This year, in addition to qualified plan amendments, employers should review their group health plans and related documents for compliance with new healthcare reform requirements.  For example, employers must determine whether their group health plans are “grandfathered” for the purposes of healthcare reform. Generally, group health plans must update plan documents for changes with respect to dependent care eligibility, lifetime and annual limits and pre-existing condition limitations.  If a group health plan is a non-grandfathered plan for healthcare reform purposes, additional changes are required.  Further, employers should update their group health plans for compliance with recent changes under HITECH, GINA, CHIPRA, MHPAEA and Michelle’s Law. 

Employers also should review their nonqualified deferred compensation plans with a view to identifying any operational or plan document corrections that are necessary under applicable guidance.  Completion of such corrections by the end of 2010 will result in more advantageous tax treatment.  A review of employee agreements that contain continuation health coverage should also be performed to ensure that such arrangements are not discriminatory under new healthcare reform rules.

For a detailed discussion of all required amendments and changes to administrative procedure that may be required before the end of the 2010 plan year, please see our White Paper.

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