Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations 45993 

Dated: August 31, 2009. 

Matthew S. Borman, 

Acting Assistant Secretary for Export 

Administration. 

[FR Doc. E9–21367 Filed 9–4–09; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9459] 

RIN 1545–BH53 

Reasonable Good Faith Interpretation 

of Required Minimum Distribution 

Rules by Governmental Plans 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations under sections 401(a)(9) and 

403(b) of the Internal Revenue Code 

(Code) to permit a governmental plan to 

comply with the required minimum 

distribution rules by using a reasonable 

and good faith interpretation of the 

statute. These regulations affect 

administrators of, employers 

maintaining, participants in, and 

beneficiaries of governmental plans. 

DATES: Effective Date: These regulations 

are effective on September 8, 2009. 

Applicability Date: These regulations 

apply to all plan years to which section 

401(a)(9) applies to the plan. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, Cathy V. 

Pastor or Michael P. Brewer at (202) 

622–6090 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

Section 401(a)(9) provides required 

minimum distribution rules for a 

qualified trust under section 401(a). In 

general, under these rules, distribution 

of each participant’s entire interest must 

begin by April 1 of the calendar year 

following the later of (1) the calendar 

year in which the participant attains age 

701⁄2 or (2) the calendar year in which 

the participant retires (‘‘the required 

beginning date’’). If the entire interest of 

the participant is not distributed by the 

required beginning date, then section 

401(a)(9)(A) provides that the entire 

interest of the participant must be 

distributed beginning not later than the 

required beginning date, in accordance 

with regulations, over the life of the 

participant or lives of the participant 

and a designated beneficiary (or over a 

period not extending beyond the life 

expectancy of the participant or the life 

expectancy of the participant and a 

designated beneficiary). Section 

401(a)(9)(B) provides the required 

minimum distribution rules after the 

death of the participant. 

IRAs described in section 408, section 

403(b) plans, and eligible deferred 

compensation plans under section 

457(b), also are subject to the required 

minimum distribution rules of section 

401(a)(9) pursuant to sections 408(a)(6) 

and (b)(3), 403(b)(10), and 457(d)(2), 

respectively, and the regulations under 

those sections. In 2002, the IRS and the 

Treasury Department published final 

regulations under sections 401(a)(9), 

403(b), and 408 in the Federal Register 

(67 FR 18987). Section 1.401(a)(9)–1, 

A–2(a), provides that the final 

regulations apply for purposes of 

determining required minimum 

distributions for calendar years 

beginning on or after January 1, 2003. 

The rules for defined benefit plans and 

annuities were included in a temporary 

regulation, § 1.401(a)(9)–6T, as well as 

in a proposed regulation (67 FR 18834) 

in order to allow taxpayers to comment 

on the rules. 

In 2004, the IRS and the Treasury 

Department replaced the temporary 

regulations with final regulations under 

§ 1.401(a)(9)–6 (69 FR 33288). The final 

regulations contain a ‘‘grandfather rule’’ 

in Q&A–16, which provides that 

annuity distribution options provided 

under the terms of a governmental plan 

(within the meaning section 414(d)) as 

in effect on April 17, 2002, are treated 

as satisfying the requirements of section 

401(a)(9) if they satisfy a reasonable and 

good faith interpretation of the 

provisions of section 401(a)(9). In 

addition, Q&A–17 provides that, for 

distributions from any defined benefit 

plan or annuity contract during 2003, 

2004, and 2005, the payments could 

satisfy a reasonable and good faith 

interpretation of section 401(a)(9) in lieu 

of § 1.401(a)(9)–6. For governmental 

plans, § 1.401(a)(9)–6, Q&A–17, 

extended this reasonable good faith 

standard to the end of the calendar year 

that contains the 90th day after the 

opening of the first legislative session of 

the legislative body with the authority 

to amend the plan that begins on or after 

June 15, 2004, if such 90th day is later 

than December 31, 2005. 

In 2003, the IRS and the Treasury 

Department published final regulations 

under section 457(b) in the Federal 

Register (68 FR 41230). These 

regulations included § 1.457–6(d), 

which provides that a section 457(b) 

eligible plan must meet the 

requirements of section 401(a)(9) and 

the regulations under that section. 

In 2007, the IRS and the Treasury 

Department published final regulations 

under section 403(b) in the Federal 

Register (72 FR 41128). These 

regulations, which become effective for 

tax years beginning after December 31, 

2008, included § 1.403(b)–6(e)(1), which 

provides that a section 403(b) contract 

must meet the requirements of section 

401(a)(9). Section 1.403(b)–6(e)(2) 

provides, with certain exceptions, that 

section 403(b) contracts apply the 

section 401(a)(9) required minimum 

distribution rules in accordance with 

§ 1.408–8. 

Section 1.408–8, Q&A–1, provides, 

with certain exceptions, that in order to 

satisfy section 401(a)(9) for purposes of 

determining required minimum 

distributions, the rules of § 1.401(a)(9)– 

1 through 1.401(a)(9)–9 must be applied. 

Section 823 of the Pension Protection 

Act of 2006, Public Law 109–280 (120 

Stat. 780) (PPA 06), instructs the 

Secretary of the Treasury to issue 

regulations under which, for all years to 

which section 401(a)(9) applies, a 

governmental plan, within the meaning 

of section 414(d), shall be treated as 

having complied with section 401(a)(9) 

if such plan complies with a reasonable 

good faith interpretation of section 

401(a)(9). 

On July 10, 2008, the IRS and 

Treasury Department published a notice 

of proposed rulemaking (REG–142040– 

07) in the Federal Register (73 FR 

39630–01) proposing regulations that 

would implement section 823 of PPA 06 

by amending the regulations under 

sections 401(a)(9) and 403(b) of the 

Code. The IRS and Treasury Department 

received no comments on the proposed 

regulations and no public hearing was 

requested or held. Accordingly, the 

provisions of these final regulations are 

identical to the proposed regulations. 

Explanation of Provisions 

The final regulations amend the 

regulations under section 401(a)(9) to 

treat a governmental plan, within the 

meaning of section 414(d), as having 

complied with the rules of section 

401(a)(9) if the governmental plan 

applies a reasonable and good faith 

interpretation of section 401(a)(9). The 

same rule applies to an eligible 457(b) 

plan maintained by a government. In 

addition, this rule applies to a section 

403(b) contract that is part of a 

governmental plan, and the regulations 

under section 403(b) are amended 

accordingly. The final regulations also 

make conforming amendments to the 

regulations under section 401(a)(9) that 

eliminate other special rules for 


CPrice-Sewell on DSKGBLS3C1PROD with RULES
45994 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations 

governmental plans which are rendered 

superfluous with this change. 

Effective/Applicability Date 

These regulations are effective on 

September 8, 2009 and apply to all plan 

years to which section 401(a)(9) applies. 

Special Analyses 

It has been determined that these final 

regulations are not a significant 

regulatory action as defined in 

Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations, and, because 

§§ 1.401(a)(9)–1 and 1.403(b)–6 do not 

impose a collection of information on 

small entities, the Regulatory Flexibility 

Act (5 U.S.C. chapter 6) does not apply. 

Pursuant to section 7805(f) of the Code, 

the notice of proposed rulemaking 

preceding these regulations was 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

Drafting Information 

The principal authors of these 

regulations are Michael P. Brewer and 

Cathy V. Pastor, Office of Division 

Counsel/Associate Chief Counsel (Tax 

Exempt and Government Entities). 

However, other personnel from the IRS 

and the Treasury Department 

participated in the development of these 

regulations. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Adoption of Amendments to the 

Regulations 

■ Accordingly, 26 CFR part 1 is 

amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.401(a)(9)–1 is 

amended by adding a new paragraph (d) 

to A–2 as follows: 

§ 1.401(a)(9)–1 Minimum distribution 

requirement in general. 

* * * * * 

A–2. * * * 

(d) Special rule for governmental 

plans. Notwithstanding anything to the 

contrary in this A–2, a governmental 

plan (within the meaning of section 

414(d)), or an eligible governmental 

plan described in § 1.457–2(f), is treated 

as having complied with section 

401(a)(9) for all years to which section 

401(a)(9) applies to the plan if the plan 

complies with a reasonable and good 

faith interpretation of section 401(a)(9). 

§ 1.401(a)(9)–6 [Amended] 

■ Par. 3. Section 1.401(a)(9)–6 is 

amended by: 

■ 1. Removing Q&A–16. 

■ 2. Redesignating Q&A–17 as Q&A–16. 

■ 3. Removing the word ‘‘A–16’’ and 

adding ‘‘A–15’’ in the newly-designated 

A–16. 

■ 4. Removing the last sentence of the 

newly-designated A–16. 

■ Par. 4. Section 1.403(b)–6 is amended 

by: 

■ 1. Revising the last sentence of 

paragraph (e)(2). 

■ 2. Adding a new paragraph (e)(8). 

The revisions and addition are as 

follows: 

§ 1.403(b)–6 Timing of distributions and 

benefits. 

* * * * * 

(e) Minimum required distributions 

for eligible plans. 

* * * * * 

(2) * * * Consequently, except as 

otherwise provided in this paragraph 

(e), the distribution rules in section 

401(a)(9) are applied to section 403(b) 

contracts in accordance with the 

provisions in § 1.408–8 for purposes of 

determining required minimum 

distributions. 

* * * * * 

(8) Special rule for governmental 

plans. A section 403(b) contract that is 

part of a governmental plan (within the 

meaning of section 414(d)) is treated as 

having complied with section 401(a)(9) 

for all years to which section 401(a)(9) 

applies to the contract, if the contract 

complies with a reasonable and good 

faith interpretation of section 401(a)(9). 

* * * * * 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: August 20, 2009. 

Michael Mundaca, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. E9–21453 Filed 9–4–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[TD 9457] 

RIN 1545–BG71 

Employer Comparable Contributions to 

Health Savings Accounts Under 

Section 4980G, and Requirement of 

Return for Filing of the Excise Tax 

Under Section 4980B, 4980D, 4980E or 

4980G 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations providing guidance on 

employer comparable contributions to 

Health Savings Accounts (HSAs) under 

section 4980G of the Internal Revenue 

Code (Code) as amended by sections 

302, 305 and 306 of the Tax Relief and 

Health Care Act of 2006 (the Act). The 

final regulations also provide guidance 

relating to the manner and method of 

reporting and paying the excise tax 

under sections 4980B, 4980D, 4980E, 

and 4980G of the Code. These final 

regulations would affect employers that 

contribute to employees’ HSAs and 

Archer MSAs, employers or employee 

organizations that sponsor a group 

health plan, and certain third parties 

such as insurance companies or HMOs 

or third-party administrators who are 

responsible for providing benefits under 

the plan. 

DATES: Effective date. These regulations 

are effective on September 8, 2009. 

Applicability date. The sections of 

these regulations that provide guidance 

on employer comparable contributions 

to HSAs under section 4980G apply to 

employer contributions made on or after 

January 1, 2010. The sections of these 

regulations that provide guidance 

relating to the excise tax under sections 

4980B, 4980D, 4980E and 4980G apply 

to any Form 8928 that is due on or after 

January 1, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the final regulations as they 

relate to sections 4980E or 4980G, 

Mireille Khoury at (202) 622–6080; and 

concerning the final regulations as they 

relate to section 4980B or 4980D, Russ 

Weinheimer at (202) 622–6080 (not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in these regulations has been 

reviewed and approved by the Office of 


CPrice-Sewell on DSKGBLS3C1PROD with RULES