Reg. § 1.401(a)(26)-9 Effective dates and transition rules.
(a) In general Except as provided in , , and of this section, section and the regulations thereunder apply to plan years beginning on or after January 1, 1989.
(b) Transition rules
(1) Governmental plans and certain section 403(b) annuities Section is treated as satisfied for plan years beginning before the later of January 1, 1996, or 90 days after the opening of the first legislative session beginning on or after January 1, 1996, of the governing body with authority to amend the plan, if that body does not meet continuously, in the case of governmental plans described in section , including plans subject to section (nonelective plans). For purposes of this , the term “governing body with authority to amend the plan” means the legislature, board, commission, council, or other governing body with authority to amend the plan.
(2) Early retirement “window-period” benefits Early retirement benefits available under a plan only to employees who retire within a limited period of time, not to exceed one year, are treated as satisfying section if such benefits are provided under plan terms that were adopted and in effect on or before March 14, 1989.
(3) Employees who do not benefit because of a minimum-period-of-service requirement or a last-day requirement For the first plan year beginning after December 31, 1988, and before January 1, 1990, employees who are eligible to participate under the plan and who fail to accrue a benefit solely because of the failure to satisfy either a minimum-period-of-service requirement of 1000 hours of service or less or a last-day requirement may be treated as benefiting under the plan.
(4) Certain plan terminations
(i) In general Except as provided in of this section, if a plan terminates after section becomes effective with respect to the plan (as determined under of this section), the plan is not treated as a qualified plan upon termination unless it complies with section and the regulations thereunder (to the extent they are applicable) for all periods for which section is effective with respect to the plan.
(ii) Exception Notwithstanding and of this section, a plan does not fail to be treated as a qualified plan upon termination merely because the plan fails to satisfy the requirements of section and the regulations thereunder if the plan is terminated with a termination date on or before December 31, 1989, and either of the following conditions is satisfied:
(A) In the case of a defined benefit plan, no highly compensated employee has an accrued benefit under the plan exceeding the lesser of either the benefit the employee had accrued as of the close of the last plan year beginning before January 1, 1989, or the benefit the employee would have accrued as of the close of the last plan year under the terms of the plan in effect and applicable with respect to the employee on December 13, 1988.
(B) In the case of a defined contribution plan, no highly compensated employee receives a contribution allocation for any plan year beginning after December 31, 1988. For this purpose, a contribution allocation with respect to an employee for a plan year beginning before January 1, 1989, may be treated as a contribution allocation for a plan year beginning after December 31, 1988, if the allocation for the prior year exceeds the allocation that the employee would have received for such year under the terms of the plan in effect and applicable with respect to the employee on December 13, 1988. An allocation of forfeitures to highly compensated employees with respect to contributions made for plan years beginning before January 1, 1988, does not cause a defined contribution plan to fail to satisfy the conditions of this .
(5) ESOPs and non-ESOPs Notwithstanding of this section and , an employer may treat the rule in , regarding mandatory disaggregation of ESOPs and non-ESOPs as not effective for plan years beginning before January 1, 1990.
(c) Waiver of excise tax on reversions
(1) In general Pursuant to section 1112(e)(3) of the Tax Reform Act of 1986 (TRA '86), if certain conditions are satisfied, a waiver of the excise tax under section applies with respect to any employer reversion that occurs by reason of the termination or merger of a plan before the first year to which section applies to the plan. In general, the applicable conditions are that the plan must have been in existence on August 16, 1986; that if section was in effect for the plan year including August 16, 1986, the plan would have failed to satisfy the requirements of section and would have continued to fail the requirements at all times thereafter; that the plan satisfies the applicable conditions in or of this section; and that certain requirements regarding asset or liability transfers and mergers and spinoffs involving the plan after August 16, 1986, are satisfied.
(2) Termination date An employer reversion with respect to a plan is eligible for the section excise tax waiver only if the employer reversion occurs by reason of the termination of the plan with a termination date prior to the first plan year for which section applies to the plan. Solely for purposes of this waiver, the employer reversion is treated as satisfying this even though the plan's termination date is during the first plan year for which section applies to the plan if the plan's termination date is on or before May 31, 1989. If the termination date occurs in the first plan year for which section applied to the plan and the employer receives a reversion that is eligible for the waiver of the section tax, the plan is subject to the interest rate restriction set forth in section 12(e)(3)(B) of TRA '86 as amended.
(3) Failure to satisfy section 401(a)(26) An employer reversion with respect to a plan is eligible for the excise tax waiver only if the plan was in existence on August 16, 1986, and, if section had applied to the plan for the plan year including such date, the plan would have failed to satisfy section for the plan year and continuously thereafter until the plan's termination or merger. For purposes of this , a plan is treated as though it would have failed to satisfy section before such section actually applied to the plan only if the plan (as defined under section ) failed to benefit at least the lesser of 50 employees or 40 percent of the employer's employees. In general, this determination is to be made on the basis of only the applicable statutory provisions, without regard to the regulations under section . Thus, for example, the prior benefit structure rules in do not apply in determining whether a plan would have failed to satisfy section for plan years beginning prior to the effective date of section with respect to the plan.
(d) Special rule for collective bargaining agreements In the case of a plan maintained pursuant to one or more collective bargaining agreements (as defined in ) that were ratified before March 1, 1986, section and the regulations thereunder shall not apply to plan years beginning before the earlier of—
(1) January 1, 1991, or
(2) The later of—
(i) January 1, 1989, or
(ii) The date on which the last of such collective bargaining agreements terminates. For purposes of this , any extension or renegotiation of any collective bargaining agreement that is ratified after February 28, 1986, is disregarded in determining the date on which such collective bargaining agreement terminates.
[T.D. 8375, 56 FR 63419, Dec. 4, 1991, as amended by T.D. 8487, 58 FR 46838, Sept. 3, 1993]