In Revenue Procedure 2019-20, the IRS extended the determination letter program, effective as of September 1, 2019, to include merged plans resulting from a corporate merger or similar transaction. For a merged plan to be eligible for a favorable determination letter, (i) the date of the plan merger must occur no later than the last day of the first plan year beginning after the plan year that includes the closing date of the corporate transaction, and (ii) the determination letter application must be submitted between the date of the plan merger and the last day of the first plan year beginning after the date of the plan merger. In addition, the IRS will accept determination letter applications for individually designed statutory hybrid plans during a 12-month window beginning on September 1, 2019. As always, the IRS will continue to process determination letter applications for initial plan qualification and for qualification… Continue Reading
In Rev. Proc. 2018-19, the IRS reduced the fee for filing for a favorable determination letter on Form 5310 in conjunction with a plan termination from $3,000 to $2,300. The reduced fee is effective retroactively for all Forms 5310 filed on or after January 2, 2018. Filers who paid the $3,000 user fee will receive a $700 refund. View Rev. Proc. 2018-19.
The IRS recently announced new requirements for determination letter applications for defined benefit plans. Applicants must identify, either in the cover letter to the application or in an attachment, whether the plan contains language which allows participants already receiving annuity payments to accelerate their remaining payments by receiving a lump sum in lieu of a future annuity stream. If the plan does contain such language, also identify whether it satisfies one of the four “Pre-Notice Acceleration” conditions in Notice 2015-49. If the applicant states that such risk transfer language is included in the plan and it satisfies one of the conditions in Notice 2015-49, then the IRS will issue a determination letter with a favorable caveat providing reliance on the risk transfer language. Plans with risk transfer language that don’t meet one of the conditions in Notice 2015-49 will not receive a determination letter unless the risk transfer language is… Continue Reading
Rev. Proc. 2016-37 provides new guidance on changes to the IRS’s determination letter program for individually designed, qualified retirement plans. As previously announced in Notice 2016-03, the five-year remedial amendment cycle for individually designed plans will be eliminated effective January 1, 2017. After that date, individually designed plans may only seek a determination letter for the plan’s initial qualification, upon the plan’s termination, and in “certain other circumstances.” Rev. Proc. 2016-37 states that such “other circumstances” may include significant law changes, new plan design approaches, and the inability of certain plans to convert to pre-approved plan documents. The IRS will consider its current case load and available resources when deciding if and when to permit determination letter requests in these other circumstances. To help plan sponsors remain in operational compliance with the Internal Revenue Code’s various qualification requirements, the IRS will begin issuing an annual Operational Compliance List that identifies… Continue Reading
Effective January 1, 2017, the five-year remedial amendment cycle for individually designed plans under the IRS determination letter program will be eliminated. The IRS recently announced additional revisions to the determination letter program in anticipation of this elimination. Controlled groups and affiliated service groups that previously made a Cycle A election are permitted to submit determination letter applications during the Cycle A submission period ending January 31, 2017; expiration dates on determination letters issued prior to January 4, 2016 are no longer operative; and employers that want to convert an existing individually designed plan into a defined contribution pre-approved plan and apply, if otherwise permissible, for a determination letter may do so between January 1, 2016 and April 30, 2017. Notice 2016-03 can be found here.
Cycle D filers may want to consider filing their determination letter applications before June 30, 2014 in order to take advantage of using the 2011 Form 5300. The IRS issued a new Form 5300 at the end of last year that requires additional information not required on the 2011 Form 5300. An employer wanting to file before June 30th must distribute the related Notice to Interested Parties by June 20, 2014. In general, Cycle D filers are plan sponsors whose EIN ends in 4 or 9 or multi-employer plans.
Under new procedures issued by the IRS, effective for determination letter applications submitted on and after February 1, 2013, the IRS will no longer accept working copies of a plan document as part of the submission package. Plan sponsors must now provide an executed restatement of the plan with the application. This means planning ahead for those plan restatements that require board approval, so that the restatement will be executed in advance of the January 31 filing deadline for that cycle. A copy of IRS Revenue Procedure 2013-6 can be found here.
Puerto Rico Treasury Department Issues Guidance on Determination Letter Requirements for Qualified Plans
The Puerto Rico Treasury Department recently released guidance on obtaining determination letters for retirement plans intended to be qualified under the Puerto Rico Internal Revenue Code of 2011 (“2011 Code”). The guidance is effective January 1, 2012 and included in Puerto Rico Internal Revenue Circular Letter 11-10. The new guidance provides that amendments required by the 2011 Code must be adopted by the last day of the plan year beginning on or after January 1, 2012 and must be filed with the Puerto Rico Treasury before the last day that the sponsoring employer’s Puerto Rico income tax return must be filed for the tax year that begins on or after January 1, 2012. The new guidance also details the amendments required for compliance with the 2011 PR Code. The guidance can be found here (in Spanish).
The Internal Revenue Service (IRS) announced that it will change several aspects of its employee plans determination letter program, which will take effect for determination letter applications filed on or after February 1, 2012 (for plans assigned to a five-year remedial amendment cycle) or May 1, 2012 (for plans assigned to a six-year remedial amendment cycle). Among the changes made, the IRS has eliminated elective demonstrations regarding coverage and nondiscrimination requirements. Furthermore, only plans that have made limited modifications to a pre-approved volume submitter plan may file the shorter Form 5307. These changes to the determination letter filing procedures will be reflected in Revenue Procedure 2012-6, which will be published on January 3, 2012. This announcement is available here.
The Internal Revenue Service (IRS) issued Notice 2011-97, which includes the 2011 Cumulative List, the list of statutory, regulatory, and guidance changes that the IRS will look for when reviewing individually designed plans submitted for determination letters during the Cycle B submission period, which begins February 1, 2012 and ends January 31, 2013. Notice 2011-97 is available here.