Rich Hochman's ASPPA asap on this subject:

Upon working with the Code §415 amendments, we discovered an anomaly that we expect could impact some employer plans. The problem develops because plan amendment deadlines are determined with reference to the plan year and the employer’s tax year. The Code §415 Regulations, however, start the amendment period with reference to the plan’s limitation year. A problem can arise if the limitation year is not consistent with either the plan year or the employer’s tax year.

Specifically, the remedial amendment period starts on the first day of the limitation year commencing on or after July 1, 2007. For plans with a calendar year limitation year, the amendment period started January 1, 2008, and one might assume that the amendment period would not end before the end of the limitation year. The Regulations, however, contain the following language:

“Generally, a provision of a plan that results in a failure of the plan to satisfy these final regulations is a disqualifying provision described in §1.401(b)–1(b)(3)(i). Therefore, the remedial amendment period rules of §1.401(b)–1 apply.”

Under the provisions of Regulation §1.401(b)–1, the amendment period for an existing plan generally ends on the later of (i) the last day of plan year or (ii) the due date for filing the employer’s tax return for the fiscal year during which the provision became effective.

Example:

Q. Employer A (a taxable corporation) maintains a plan with a calendar year limitation year. Both the plan year and the employer’s tax year end the last day of February. What is the amendment period for the Code §415 amendment?

A. The amendment period commences on January 1, 2008, which is the first day of the first limitation year commencing on or after July 1, 2007. The amendment period ends on the later of the last day of the plan year during which the provision became effective, (February 29, 2008), or the due date for the employer to file their tax return for the tax year during which the provision became effective, (May 15, 2008). This date may be delayed to November 15, 2008, if the employer applies for an extension of their tax-filing deadline. Thus, the deadline is either May 15, 2008 or November 15, 2008.

ASPPA asap 08-01 could be interpreted to imply that the employer was not required to amend until the last day of the limitation year, December 31, 2008. This is not the case. During the Great Lakes Benefit Conference, Marty Pippins of IRS stated that this was an unintended result and the IRS was hopeful that not too many plans were designed this way. Again, the problem of an earlier than expected amendment requirement arises when the limitation year is not the same as either the plan year or the employer’s tax year.

During recent discussions on §415 amendments, it was discovered that if a plan’s limitation year is different from both its plan year and the employer’s tax year, the plan may have an earlier amendment deadline.