IRS Updates its Operational Compliance List for Retirement Plans:

On May 24, 2021, the IRS updated its Operational Compliance List (the “List”). The IRS publishes the List to help plan sponsors and practitioners “achieve operational compliance by identifying changes in qualification requirements and Internal Revenue Code (IRC) Section 403(b) requirements effective during a calendar year.”

The List does not include periodic changes that routinely occur, such as increases in annual plan contribution limits, and the List does not constitute a comprehensive list of every item of IRS guidance or new legislation for an applicable year. Also, the IRS notes that “[i]n order to meet the qualification requirements or the IRC Section 403(b) requirements, a plan must comply operationally with each relevant requirement, even if the requirement is not included” on the List. Nonetheless, the List provides a helpful tool for monitoring major law changes in the retirement plans arena.

This version of the List addresses law changes from 2016 to 2021 (e.g., crediting service for long-term part-time employees; hardship distribution rules; COVID distribution rules). This version also addresses the following change that will become effective during 2022: final regulations relating to updated life expectancy and distribution period tables used for purposes of determining minimum required distributions.

Please note that the List deals with operational changes that take effect during the respective years that the List specifies, but in many cases conforming plan amendments do not have to be executed until a subsequent year. Plan sponsors may wish to discuss this with their plan document provider, to ensure compliance with all applicable plan amendment deadlines.