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IRS Announces Revisions to Determination Letter Program

  1. The IRS on July 21 outlined changes to the employee plans determination letter program for qualified retirement plans.

    According to Announcement 2015-19, effective Jan. 1, 2017, the IRS will eliminate the staggered 5-year determination letter remedial amendment cycles for individually designed plans and will limit the scope of the determination letter program for individually designed plans to initial plan qualification and qualification upon plan termination.

    As a result of the elimination of the 5-year remedial amendment cycles, the extension of the remedial amendment period provided in Section 5.03 of Revenue Procedure (Rev. Proc.) 2007-44 will not be available after Dec. 31, 2016, and the remedial amendment period definition in Treas. Reg. §1.401(b)-1 will apply. However, the IRS intends to extend the remedial amendment period for individually designed plans to a date that is expected to end no earlier than Dec. 31, 2017.

    Announcement 2015-19 also says that, effective July 21, 2015 and through Dec. 31, 2016, the IRS will not accept determination letter applications that are submitted off-cycle, except for determination letter applications for new plans, as defined in section 14.02(2) of Rev. Proc. 2007-44, and for terminating plans

    The IRS is accepting comments on specific issues regarding the implementation of these changes to the determination letter program. It seeks comments on the following issues:

    1. What changes should be made to the remedial amendment period that would otherwise apply to individually designed plans under Code Section 401(b)?
    2. Treasury and the IRS have received numerous comments concerning the rules relating to interim amendments, as described in section 5 of Rev. Proc. 2007-44. In view of the changes being made to the determination letter program, what additional considerations should be taken into account in connection with the current interim amendment requirement?
    3. What guidance should be issued to assist plan sponsors that wish to convert an individually designed plan into a pre-approved plan?
    4. What changes should be made to other IRS programs to facilitate the changes described in this announcement, including revisions to the Employee Plans Compliance Resolution System set forth in Rev. Proc. 2013-12, 2013-4 I.R.B. 313, as modified by Rev. Proc. 2015-27, 2015-16 I.R.B. 914, and Rev. Proc. 2015-28, 2015-16 I.R.B. 920?

    Comments may be submitted in writing on or before Oct. 1, 2015. Comments should be mailed to Internal Revenue Service, CC:PA:LPD:PR (Announcement 2015-19), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044, or sent electronically to [email protected]. Include Announcement 2015-19 in the subject line of any electronic communications. Comments also may be hand delivered Monday-Friday, 8:00 a.m.-4:00 p.m. to CC:PA:LPD:PR (Announcement 2015-19), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, D.C.