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Plan Record Retention Considerations in Corporate Transactions

As we?ÇÖve previously reported here, there are a number of record retention requirements applicable to employee benefit plans. Plan sponsors should be mindful of the impact and application of these requirements in the context of corporate mergers and acquisitions, especially if assets of the target?ÇÖs retirement plan are to be merged into the buyer?ÇÖs plan. When acquiring a company that sponsors (or has sponsored) its own retirement plan, plan sponsors should consider: Protected Benefits. Though the buyer?ÇÖs plan may be amended to protect certain benefits under the target?ÇÖs plan, as required by the Internal Revenue Code, in many cases the plan sponsor will need to refer to the target?ÇÖs actual plan document to fully understand the specifics of the protected benefits. Missing Participants. The DOL recently issued a memorandum outlining best practices for pension plans to avoid and resolve missing participant issues (we previously discussed this issue here). Included in… Continue Reading

Extended Time to Supplement Determination Letter Applications for Amended Individually Designed Statutory Hybrid Plans

On August 24, 2020, the IRS announced that applicants that submit determination letter applications for amended individually designed statutory hybrid plans, such as cash balance plans (“Hybrid Plans“), under Rev. Proc. 2019-20 may supplement such applications through the end of the year. Under Rev. Proc. 2019-20, applicants could submit determination letter applications for Hybrid Plans during the 12-month period ending on August 31, 2020. Now, an applicant may provide additional documents or information to supplement their initial submission, if it was filed by August 31, 2020, so long as: the initial application includes the Form 5300; Form 8717, including the appropriate user fee; and Form 8821 or Form 2848, if applicable; the cover letter to the initial application indicates that the application is made pursuant to Rev. Proc. 2019-20 Amended Hybrid Plan; and the cover letter to the initial application provides an address or fax number to which the IRS… Continue Reading

Increased User Fees for Certain Letter Ruling and Determination Letter Requests in 2021

The IRS recently issued Announcement 2020-14 (the ?Ç£Announcement?Ç¥), which provides notice of increased user fees for certain letter ruling and determination letter requests. The increased user fees will be included in Rev. Proc. 2021-4 and will be effective January 4, 2021. The Announcement also includes a chart showing the current user fee amounts and the increased amounts for 2021 for various types of letter ruling and determination letter requests. The Announcement is available here.

Approaching Deadline for Cash Balance Plans to Submit IRS Determination Letter Applications

Sponsors of retirement plans that use a statutory hybrid benefit formula (e.g., cash balance plans) have until August 31, 2020 to submit such plans to the IRS for a favorable determination letter. However, because ?Ç£interested parties?Ç¥ must be notified of the filing at least ten days in advance of the submission, the decision on whether to file must be made sooner (within the next week or so). Among other things, under this special determination letter cycle for cash balance plans, the IRS will review plan provisions implementing the final cash balance plan regulations. This is true even if the plan?ÇÖs cash balance formula was in place when the plan received a prior favorable determination letter. The guidance allowing for the special cycle for cash balance plans is available here.

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