Unknown. Final regulations

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--- schema: federal-register doc_type: fedreg source_file: FR-2018-07-20.xml --- 83 140 Friday, July 20, 2018 Contents Agriculture Agriculture Department See Food Safety and Inspection Service See Forest Service NOTICES Requests for Nominations: National Agricultural Research, Extension, Education, and Economics Advisory Board, Specialty Crop Committee, and National Genetics Advisory Council, 34536-34537 2018-15551 AIRFORCE Air Force Department NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 34556-34557 2018-15515 Army Army Department NOTICES Special Communication and Contact Control Measures, 34557-34558 2018-15425 Consumer Financial Protection Bureau of Consumer Financial Protection NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 34555 2018-15581 Centers Disease Centers for Disease Control and Prevention NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 34583-34593 2018-15529 2018-15530 2018-15524 2018-15525 2018-15526 2018-15527 2018-15528 Environmental Impact Statements;

Availability, etc.: Site Acquisition and Campus Consolidation for the Centers for Disease Control and Prevention/National Institute for Occupational Safety and Health, Cincinnati, OH, 34582-34583 2018-15410 Centers Medicare Centers for Medicare & Medicaid Services NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 34593-34594 2018-15466 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals:

Office of Refugee Resettlement Requirements for Refugee Cash Assistance; and Refugee Medical Assistance, 34594-34595 2018-15537 Commerce Commerce Department See International Trade Administration See National Oceanic and Atmospheric Administration Committee for Purchase Committee for Purchase From People Who Are Blind or Severely Disabled NOTICES Procurement List; Additions and Deletions, 34553-34555 2018-15570 2018-15571 Community Development Community Development Financial Institutions Fund NOTICES Funding Opportunities:

Capital Magnet Fund; 2018 Funding Round, 34685-34698 2018-15473 Corporation Corporation for National and Community Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Application Package for Segal AmeriCorps Education Award Commitment Form, 34555-34556 2018-15593 Defense Department Defense Department See Air Force Department See Army Department See Engineers Corps RULES Indemnification or Defense, or Providing Notice to the Department of Defense, Relating to a Third-Party Environmental Claim, 34471-34477 2018-15487 NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Combating Trafficking in Persons, 34581-34582 2018-15523 Energy Department Energy Department See Federal Energy Regulatory Commission PROPOSED RULES Energy Conservation Program: Test Procedure for Single Package Vertical Air Conditioners and Single Package Vertical Heat Pumps, 34499-34505 2018-15584 Meetings: Variable Refrigerant Flow Multi-Split Air Conditioners and Heat Pumps Working Group, 34498-34499 2018-15579 NOTICES Applications to Export Electric Energy:

Manifold Energy Inc., 34560-34561 2018-15583 NS Power Energy Marketing Inc., 34561 2018-15580 Requests for Nominations: Appliance Standards and Rulemaking Federal Advisory Committee, 34559-34560 2018-15582 Engineers Engineers Corps NOTICES Environmental Impact Statements; Availability, etc.: Adams and Denver Counties, Colorado General Investigation Study, Adams and Denver County, CO, 34559 2018-15429 Northern Integrated Supply Project, Larimer and Weld Counties, CO, 34558-34559 2018-15427 Environmental Protection Environmental Protection Agency PROPOSED RULES Air Quality State Implementation Plans;

Approvals and Promulgations: New York; Determination of Attainment of the 2008 8-Hour Ozone National Ambient Air Quality Standard for the Jamestown, New York Marginal Nonattainment Area, 34506-34508 2018-15623 National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Old Southington Landfill Superfund Site, 34513-34520 2018-15628 Deletion of the Union Chemical Co., Inc. Superfund Site, 34508-34513 2018-15622 NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Mobile Air Conditioner Retrofitting Program, 34576-34577 2018-15522 National Fish Program (Renewal), 34573-34574 2018-15516 Environmental Assessments; Availability, etc.: Availability of Deepwater Horizon Oil Spill Louisiana Trustee Implementation Group Final Restoration Plan/Environmental Assessment No. 4: Nutrient Reduction (Nonpoint Source) and Recreational Opportunities and Finding of No Significant Impact, 34571-34572 2018-15347 Availability of the Deepwater Horizon Oil Spill Louisiana Trustee Implementation Group Final Restoration Plan/Environmental Assessment #2:

Provide and Enhance Recreational Opportunities and Finding of No Significant Impact, 34574-34576 2018-15348 Environmental Impact Statements; Availability, etc.: Weekly Receipt, 34574 2018-15514 Meetings: National Environmental Justice Advisory Council, 34572-34573 2018-15621 Proposed Administrative Settlement Agreement and Order on Consent: Black Swan Restoration Reach Good Samaritan Superfund Site, Boulder County, CO, 34576 2018-15602 Federal Aviation Federal Aviation Administration NOTICES Petitions for Exemption;

Summaries: Air Evac EMS, Inc., 34647 2018-15533 Federal Communications Federal Communications Commission RULES Use of Spectrum Bands Above 24 GHz For Mobile Radio Services, 34478-34492 2018-14806 PROPOSED RULES Use of Spectrum Bands Above 24 GHz For Mobile Radio Services, 34520-34535 2018-14807 Federal Emergency Federal Emergency Management Agency NOTICES Flood Hazard Determinations, 34606-34608 2018-15596 2018-15597 Major Disaster and Related Determinations: New Hampshire, 34605-34606 2018-15599 2018-15600 New Jersey, 34608-34609 2018-15598 Federal Energy Federal Energy Regulatory Commission NOTICES Applications:

City of Holyoke Gas and Electric Department, 34570-34571 2018-15560 Spire Storage West, LLC; Clear Creek Storage Company, LLC, 34562-34563 2018-15556 Swan Lake North Hydro LLC, 34566 2018-15485 Combined Filings, 34561-34564, 34566-34567 2018-15483 2018-15492 2018-15493 2018-15555 2018-15563 Costs for Other Federal Agencies' Administrative Annual Charges for Fiscal Year 2017, 34568-34570 2018-15562 Designations of Commission Staff as Non-Decisional: Constellation Mystic Power, LLC, 34561 2018-15557 Effectiveness Of Exempt Wholesale Generator Status:

Stella Wind Farm, LLC; Calpine Mid-Merit II, LLC; GenOn Holdco 10, LLC; et al., 34568 2018-15558 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: Terra-Gen Dixie Valley, LLC, 34565 2018-15484 Requests under Blanket Authorizations: Columbia Gas Transmission, LLC, 34568 2018-15559 Staff Attendance, 34565-34566 2018-15479 Federal Highway Federal Highway Administration NOTICES Federal Agency Actions: Proposed Highway in California, 34647-34648 2018-15532 Federal Motor Federal Motor Carrier Safety Administration NOTICES Qualification of Drivers;

Exemption Applications: Diabetes, 34674-34677 2018-15564 2018-15565 Diabetes Mellitus, 34651-34661, 34666-34667 2018-15542 2018-15543 2018-15574 Epilepsy and Seizure Disorders, 34652-34653, 34664-34666, 34669-34671, 34678-34679 2018-15544 2018-15545 2018-15576 2018-15577 2018-15578 Hearing, 34648-34651 2018-15546 2018-15575 Vision, 34661-34664, 34667-34669, 34672-34674, 34677-34678 2018-15550 2018-15552 2018-15553 2018-15554 Federal Reserve Federal Reserve System NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 34577-34581 2018-15518 2018-15519 2018-15520 2018-15521 Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 34578 2018-15472 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 34578 2018-15471 Federal Transit Federal Transit Administration NOTICES Limitation on Claims Against Proposed Public Transportation Projects, 34679-34680 2018-15531 Food and Drug Food and Drug Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Requirements on Content and Format of Labeling for Human Prescription Drug and Biological Products, 34596-34598 2018-15512 Guidance: Documenting Electronic Data Files and Statistical Analysis Programs, 34595-34596 2018-15568 Metered Dose Inhaler and Dry Powder Inhaler Drug Products—Quality Considerations, 34598-34599 2018-15508 Food Safety Food Safety and Inspection Service NOTICES Meetings: National Advisory Committee on Microbiological Criteria for Foods, 34537-34539 2018-15594 Forest Forest Service NOTICES Environmental Impact Statements;

Availability, etc.: Bog Creek Road Project; Reopening of Public Comment Period, 34601-34602 2018-15684 Malheur National Forest, Prairie City Ranger District; Oregon; Cliff Knox Project, 34539-34542 2018-15491 General Services General Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Combating Trafficking in Persons, 34581-34582 2018-15523 Health and Human Health and Human Services Department See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Children and Families Administration See Food and Drug Administration See National Institutes of Health See Substance Abuse and Mental Health Services Administration Homeland Homeland Security Department See Federal Emergency Management Agency See U.S.

Customs and Border Protection Housing Housing and Urban Development Department NOTICES Funding Awards, 34609-34612 2018-15486 Interior Interior Department See Land Management Bureau See National Park Service NOTICES Requests for Nominations: Glen Canyon Dam Adaptive Management Work Group; Reopening, 34612 2018-15595 Internal Revenue Internal Revenue Service RULES Definitions of Qualified Matching Contributions and Qualified Nonelective Contributions, 34469-34471 2018-15495 NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 34698-34700 2018-15627 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Aluminum Extrusions from the People's Republic of China, 34548-34551 2018-15573 Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People's Republic of China, 34542-34543 2018-15572 Drawn Stainless Steel Sinks from the People's Republic of China, 34544-34545 2018-15569 Fine Denier Polyester Staple Fiber from the People's Republic of China, India, the Republic of Korea, and Taiwan, 34545-34548 2018-15567 International Trade Com International Trade Commission NOTICES Investigations;

Determinations, Modifications, and Rulings, etc.: Certain Carburetors and Products Containing Such Carburetors, 34614-34615 2018-15541 Justice Department Justice Department NOTICES Proposed Consent Decrees: Clean Air Act, 34615-34616 2018-15586 Land Land Management Bureau NOTICES Meetings: Southeast Oregon Resource Advisory Council, 34613 2018-15585 Maritime Maritime Administration NOTICES Requests for Administrative Waivers of the Coastwise Trade Laws: Vessel TIMELESS, 34680-34681 2018-15538 NASA National Aeronautics and Space Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 34616-34617 2018-15511 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Combating Trafficking in Persons, 34581-34582 2018-15523 National Institute National Institutes of Health NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Generic Clearance to Conduct Voluntary Customer/Partner Surveys, 34599-34600 2018-15490 Government-Owned Inventions; Availability for Licensing, 34599 2018-15489 Meetings:

National Institute on Alcohol Abuse and Alcoholism, 34600-34601 2018-15488 National Oceanic National Oceanic and Atmospheric Administration RULES Fisheries of the Northeastern United States: Northeast Multispecies Fishery; 2018 Sector Operations Plans and Allocation of Northeast Multispecies Annual Catch Entitlements, 34492-34497 2018-15477 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Survey to Collect Economic Data from Recreational Anglers along the Atlantic Coast, 34551 2018-15474 Meetings:

Caribbean Fishery Management Council, 34552-34553 2018-15589 Pacific Fishery Management Council, 34552 2018-15590 National Park National Park Service NOTICES National Register of Historic Places: Pending Nominations and Related Actions, 34613-34614 2018-15513 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Meetings: Advisory Committee on Reactor Safeguards Subcommittee on Plant Operations and Fire Protection, 34618 2018-15539 Meetings; Sunshine Act, 34618-34619 2018-15742 National Intelligence Office of the Director of National Intelligence NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 34617-34618 2018-15592 Pipeline Pipeline and Hazardous Materials Safety Administration NOTICES Special Permit Applications: Hazardous Materials, 34681-34684 2018-15475 2018-15476 2018-15478 Postal Regulatory Postal Regulatory Commission NOTICES New Postal Products, 34619 2018-15517 Postal Service Postal Service PROPOSED RULES New Mailing Standards for Mailpieces Containing Liquids; Extension of Comment Period, 34505-34506 2018-15548 NOTICES Product Changes:

Priority Mail Express, Priority Mail, and First-Class Package Service Negotiated Service Agreement, 34619 2018-15482 Securities Securities and Exchange Commission PROPOSED RULES Whistleblower Program Rules, 34702-34752 2018-14411 NOTICES Meetings; Sunshine Act, 34622 2018-15673 Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC, 34635 2018-15507 Cboe BYX Exchange, Inc., 34638-34639 2018-15497 Cboe BZX Exchange, Inc., 34621-34622 2018-15506 Cboe EDGA Exchange, Inc., 34630-34632 2018-15505 Cboe EDGX Exchange, Inc., 34619-34621 2018-15498 Nasdaq BX, Inc., 34639-34645 2018-15502 Nasdaq GEMX, LLC, 34623-34625 2018-15501 Nasdaq ISE, LLC, 34625-34630, 34635-34638 2018-15499 2018-15503 Nasdaq MRX, LLC, 34632-34635 2018-15504 Small Business Small Business Administration NOTICES Disaster Declarations:

New Jersey, 34645 2018-15588 Texas, 34645 2018-15587 West Virginia, 34645-34646 2018-15591 Substance Substance Abuse and Mental Health Services Administration NOTICES Meetings: National Advisory Council, 34601 2018-15246 Surface Transportation Surface Transportation Board NOTICES Requests for Nominations: Rail Energy Transportation Advisory Committee Vacancies, 34646 2018-15604 Transportation Department Transportation Department See Federal Aviation Administration See Federal Highway Administration See Federal Motor Carrier Safety Administration See Federal Transit Administration See Maritime Administration See Pipeline and Hazardous Materials Safety Administration Treasury Treasury Department See Community Development Financial Institutions Fund See Internal Revenue Service Customs U.S.

Customs and Border Protection NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Customs Declaration, 34602-34603 2018-15561 Country of Origin Determinations: Certain Insufflation Tubing, 34603-34605 2018-15536 Environmental Impact Statements; Availability, etc.: Bog Creek Road Project; Reopening of Public Comment Period, 34601-34602 2018-15684 Separate Parts In This Issue Part II Securities and Exchange Commission, 34702-34752 2018-14411 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.

To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription. 83 140 Friday, July 20, 2018 Rules and Regulations DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9835] RIN-1545-BN05 Definitions of Qualified Matching Contributions and Qualified Nonelective Contributions AGENCY:

Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains final regulations that amend the definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs) under regulations regarding certain qualified retirement plans that contain cash or deferred arrangements under section 401(k) or that provide for matching contributions or employee contributions under section 401(m). Under these regulations, an employer contribution to a plan may be a QMAC or QNEC if it satisfies applicable nonforfeitability requirements and distribution limitations at the time it is allocated to a participant's account, but need not meet these requirements or limitations when it is contributed to the plan.

These regulations affect participants in, beneficiaries of, employers maintaining, and administrators of tax-qualified plans that contain cash or deferred arrangements or provide for matching contributions or employee contributions. DATES: *Effective date.* These regulations are effective July 20, 2018. *Applicability date.* These regulations apply to plan years beginning on or after July 20, 2018. However, taxpayers may apply these regulations to earlier periods. FOR FURTHER INFORMATION CONTACT:

Angelique Carrington at

(202)317-4148 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Section 401(k)(1) provides that a profit-sharing or stock bonus plan, a pre-ERISA money purchase plan, or a rural cooperative plan will not be considered as failing to satisfy the requirements of section 401(a) merely because the plan includes a qualified cash or deferred arrangement (CODA). To be considered a qualified CODA, a plan must satisfy several requirements, including:

(i)Under section 401(k)(2)(B), amounts held by the plan's trust that are attributable to employer contributions made pursuant to an employee's election must satisfy certain distribution limitations;

(ii)under section 401(k)(2)(C), an employee's right to such employer contributions must be nonforfeitable; and

(iii)under section 401(k)(3), such employer contributions must satisfy certain nondiscrimination requirements. Under section 401(k)(3)(D)(ii), the employer contributions taken into account for purposes of applying the nondiscrimination requirements may, under such rules as the Secretary may provide and at the election of the employer, include matching contributions within the meaning of section 401(m)(4)(A) that meet the distribution limitations and nonforfeitability requirements of section 401(k)(2)(B) and

(C)(also referred to as qualified matching contributions or QMACs) and qualified nonelective contributions within the meaning of section 401(m)(4)(C) (QNECs). Under section 401(m)(4)(C), a QNEC is an employer contribution, other than a matching contribution, with respect to which the distribution limitations and nonforfeitability requirements of section 401(k)(2)(B) and

(C)are met. Under § 1.401(k)-1(b)(1)(ii), a CODA satisfies the applicable nondiscrimination requirements if it satisfies the actual deferral percentage

(ADP)test of section 401(k)(3), described in § 1.401(k)-2. The ADP test limits the disparity permitted between the percentage of compensation made as employer contributions to the plan for a plan year on behalf of eligible highly compensated employees and the percentage of compensation made as employer contributions on behalf of eligible nonhighly compensated employees. If the ADP test limits are exceeded, the employer must take corrective action to ensure that the limits are met. In determining the amount of employer contributions made on behalf of an eligible employee, employers are allowed to take into account certain QMACs and QNECs made on behalf of the employee by the employer. In lieu of applying the ADP test, an employer may choose to design its plan to satisfy an ADP safe harbor, including the ADP safe harbor provisions of section 401(k)(12), described in § 1.401(k)-3. Under § 1.401(k)-3, a plan satisfies the ADP safe harbor provisions of section 401(k)(12) if, among other things, it satisfies certain contribution requirements. With respect to the safe harbor under section 401(k)(12), an employer may choose to satisfy the contribution requirement by providing a certain level of QMACs or QNECs to eligible nonhighly compensated employees under the plan. A defined contribution plan that provides for matching or employee after-tax contributions must satisfy the nondiscrimination requirements under section 401(m) with respect to those contributions for each plan year. Under § 1.401(m)-1(b)(1), the matching contributions and employee contributions under a plan satisfy the nondiscrimination requirements for a plan year if the plan satisfies the actual contribution percentage

(ACP)test of section 401(m)(2) described in § 1.401(m)-2. The ACP test limits the disparity permitted between the percentage of compensation made as matching contributions and after-tax employee contributions for or by eligible highly compensated employees under the plan and the percentage of compensation made as matching contributions and after-tax employee contributions for or by eligible nonhighly compensated employees under the plan. If the ACP test limits are exceeded, the employer must take corrective action to ensure that the limits are met. In determining the amount of employer contributions made on behalf of an eligible employee, employers are allowed to take into account certain QNECs made on behalf of the employee by the employer. Employers must also take into account QMACs made on behalf of the employee by the employer unless an exclusion applies (including an exclusion for QMACs that are taken into account under the ADP test). If an employer designs its plan to satisfy the ADP safe harbor of section 401(k)(12), it may avoid performing the ACP test with respect to matching contributions under the plan, as long as the additional requirements of the ACP safe harbor of section 401(m)(11) are met. As defined in § 1.401(k)-6, QMACs and QNECs must satisfy the nonforfeitability requirements of § 1.401(k)-1(c) and the distribution limitations 1 of § 1.401(k)-1(d) “when they are contributed to the plan.” Similarly, under the independent definitions in § 1.401(m)-5, QMACs and QNECs must satisfy the nonforfeitability requirements of § 1.401(k)-1(c) and the distribution limitations of § 1.401(k)-1(d) “at the time the contribution is made.” In general, contributions satisfy the nonforfeitability requirements of § 1.401(k)-1(c) if they are immediately nonforfeitable within the meaning of section 411, and contributions satisfy the distribution limitations of § 1.401(k)-1(d) if they may not be distributed before the employee's death, disability, severance from employment, attainment of age 59 1/2 , or hardship, or upon the termination of the plan. 1 The existing definitions of QMACs and QNECs in §§ 1.401(k)-6 and 1.401(m)-5 refer to the distribution requirements of § 1.401(k)-1(d). Section 1.401(k)-1(d) is more appropriately characterized as providing distribution limitations (consistent with the heading of § 1.401(k)-1d)). Accordingly, this preamble refers to distribution limitations rather than distribution requirements, and, as noted in the Explanation of Provisions section of this preamble, the definitions of QMACs and QNECs in §§ 1.401(k)-6 and 1.401(m)-5 are amended in the final regulations to refer to distribution limitations. Before 2017, the Department of the Treasury (Treasury Department) and the Internal Revenue Service

(IRS)received comments with respect to the definitions of QMACs and QNECs in §§ 1.401(k)-6 and 1.401(m)-5. In particular, commenters asserted that employer contributions should qualify as QMACs and QNECs as long as they satisfy applicable nonforfeitability requirements at the time they are allocated to participants' accounts, rather than when they are first contributed to the plan. Commenters pointed out that interpreting sections 401(k)(3)(D)(ii) and 401(m)(4)(C) to require satisfaction of applicable nonforfeitability requirements at the time amounts are first contributed to the plan would preclude plan sponsors with plans that permit the use of amounts in plan forfeiture accounts to offset future employer contributions under the plan from applying such amounts to fund QMACs and QNECs. This is because the amounts would have been allocated to the forfeiture accounts only after a participant incurred a forfeiture of benefits and, thus, generally would have been subject to a vesting schedule when they were first contributed to the plan. Commenters requested that QMAC and QNEC requirements not be interpreted to prevent the use of plan forfeitures to fund QMACs and QNECs. The commenters urged that the nonforfeitability requirements under § 1.401(k)-6 should apply when QMACs and QNECs are allocated to participants' accounts and not when the contributions are first made to the plan. In considering the comments, the Treasury Department and the IRS took into account that the nonforfeitability requirements applicable to QMACs and QNECs are intended to ensure that QMACs and QNECS provide nonforfeitable benefits for the participants who receive them. In accordance with that purpose, the Treasury Department and the IRS concluded that it is sufficient to require that amounts allocated to participants' accounts as QMACs and QNECs be nonforfeitable at the time they are allocated to participants' accounts, rather than when such contributions are made to the plan. Accordingly, on January 18, 2017, the Treasury Department and the IRS issued a notice of proposed rulemaking (REG-131643-15), which was published in the **Federal Register** (82 FR 5477). Under the notice of proposed rulemaking, the Treasury Department and the IRS proposed to amend § 1.401(k)-6 to provide that amounts used to fund QMACs and QNECs must be nonforfeitable and subject to distribution limitations in accordance with § 1.401(k)-1(c) and

(d)when allocated to participants' accounts, and to no longer require that amounts used to fund QMACs and QNECs satisfy the nonforfeitability requirements and distribution limitations when they are first contributed to the plan. As a result, forfeitures would be permitted to be used to fund QMACs and QNECs. No public hearing on the notice of proposed rulemaking was requested or held. Several comments on the proposed rules were submitted, and, after consideration of all the comments, the proposed regulations are adopted without substantive modification. This document contains amendments to 26 CFR part 1. Explanation of Provisions This document contains final regulations that amend the definitions of QMACs and QNECs to provide that employer contributions to a plan are QMACs or QNECs if they satisfy applicable nonforfeitability requirements and distribution limitations at the time they are allocated to participants' accounts. Accordingly, these regulations permit forfeitures of prior contributions to be used to fund QMACs and QNECs. The Treasury Department and the IRS received five comments in response to the notice of proposed rulemaking that raised issues relating to the modification of the QMAC and QNEC definitions, including issues with respect to plan amendments and the pre-approved plan program, as described in Rev. Proc. 2015-36, 2015-27 I.R.B. 20, Part III of Rev. Proc. 2016-37, 2016-29 I.R.B. 136, and Rev. Proc. 2017-41, 2017-29 I.R.B. 92. The Treasury Department and the IRS determined that the comments relating to the pre-approved plan program are outside the scope of these regulations, which relate solely to the modification of the definitions of QMACs and QNECs. These comments have been shared with IRS Tax Exempt and Government Entities, Employee Plans, which administers the pre-approved plan program. The comments also included questions relating to the application of section 411(d)(6) in cases in which a plan sponsor seeks to amend its plan to apply the rules in this regulation. The application of section 411(d)(6) is generally outside the scope of these regulations. However, if a plan sponsor adopts a plan amendment to define QMACs and QNECs in a manner consistent with these final regulations and applies that amendment prospectively to future plan years, section 411(d)(6) would not be implicated. Moreover, in the common case of a plan that provides that forfeitures will be used to pay plan expenses incurred during a plan year and that any remaining forfeitures in the plan at the end of the plan year will be allocated pursuant to a specified formula among active participants who have completed a specified number of hours of service during the plan year, section 411(d)(6) would not prohibit a plan amendment adopted before the end of the plan year that permits the use of forfeitures to fund QMACs and QNECs (even if, at the time of the amendment, one or more participants had already completed the specified number of hours of service). This is because all conditions for receiving an allocation will not have been satisfied at the time of the amendment, since one of the conditions for receiving an allocation is that plan expenses at the end of the plan year are less than the amount of forfeitures. See § 1.411(d)-4, Q&A-1(d)(8) (features that are not section 411(d)(6) protected benefits include “[t]he allocation dates for contributions, forfeitures, and earnings, the time for making contributions (but not the conditions for receiving an allocation of contributions or forfeitures for a plan year after such conditions have been satisfied), and the valuation dates for account balances”). These regulations are substantively the same as the proposed regulations. However, the Treasury Department and the IRS have determined that the distribution requirements referred to in the existing definitions of QMACs and QNECs in §§ 1.401(k)-6 and 1.401(m)-5 are more appropriately characterized as distribution limitations (consistent with the heading of § 1.401(k)-1(d)), and, accordingly, these definitions have been amended to refer to distribution limitations. Effective/Applicability Date These regulations are effective on July 20, 2018. These regulations apply to plan years beginning on or after July 20, 2018. However, taxpayers may apply these regulations to earlier periods. Special Analyses This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Department of the Treasury and the Office of Management and Budget regarding review of tax regulations. Because the regulation does 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 Internal Revenue 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. Statement of Availability of IRS Documents IRS Revenue Procedures, Revenue Rulings, notices and other guidance cited in this preamble are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at *http://www.irs.gov* . Drafting Information The principal author of these regulations is Angelique Carrington, Office of Associate Chief Counsel (Tax Exempt and Governmental Entities). However, other personnel from the IRS and 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. 401(m)(9) and 26 U.S.C. 7805. * * * **Par. 2.** Section 1.401(k)-1 is amended by adding paragraph (g)(5) to read as follows: § 1.401(k)-1 Certain cash or deferred arrangements.

(g)* * *

(5)*Applicability date for definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs).* The revisions to the second sentence in the definitions of QMACs and QNECs in § 1.401(k)-6 apply to plan years ending on or after July 20, 2018. **Par. 3.** Section 1.401(k)-6 is amended by revising the second sentence in the definitions of *Qualified matching contributions (QMACs)* and *Qualified nonelective contributions (QNECs)* to read as follows: § 1.401(k)-6 Definitions. *Qualified matching contributions (QMACs).* * * * Thus, the matching contributions must satisfy the nonforfeitability requirements of § 1.401(k)-1(c) and be subject to the distribution limitations of § 1.401(k)-1(d) when they are allocated to participants' accounts. * * * *Qualified nonelective contributions (QNECs).* * * * Thus, the nonelective contributions must satisfy the nonforfeitability requirements of § 1.401(k)-1(c) and be subject to the distribution limitations of § 1.401(k)-1(d) when they are allocated to participants' accounts. **Par. 4.** Section 1.401(m)-1 is amended by adding paragraph (d)(4) to read as follows: § 1.401(m)-1 Employee contributions and matching contributions.

(d)* * *

(4)*Effective date for definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs).* The revisions to the definitions of QMACs and QNECs in § 1.401(m)-5 apply to plan years ending on or after July 20, 2018. ** Par. 5.** Section 1.401(m)-5 is amended by revising the definitions of *Qualified matching contributions (QMACs)* and *Qualified nonelective contributions (QNECs* ) to read as follows: § 1.401(m)-5 Definitions. *Qualified matching contributions (QMACs). Qualified matching contributions or QMACs* means qualified matching contributions or QMACs as defined in § 1.401(k)-6. *Qualified nonelective contributions (QNECs).* *Qualified nonelective contributions or QNECs* means qualified nonelective contributions or QNECs as defined in § 1.401(k)-6. Kirsten Wielobob, Deputy Commissioner for Services and Enforcement. Approved: July 13, 2018. David J. Kautter, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2018-15495 Filed 7-19-18; 8:45 am]

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