IRS Temporarily Suspends Prototype IRA Opinion Letter Program

The IRS on March 14 announced that it is temporarily suspending its Prototype IRA Opinion Letter Program. 

Announcement 2022-06 provides that, effective March 14, 2022, and until further notice, the IRS will not accept applications for opinion letters on prototype IRAs (traditional, Roth and SIMPLE IRAs), SEPs (including salary reduction SEPs (SARSEPs)), and SIMPLE IRA plans. 

The announcement also provides that, pending issuance of future guidance: (1) adopters of prototype IRAs, SEPs, and SIMPLE IRA plans may rely on a previously received favorable opinion letter; and (2) taxpayers may use existing model forms to maintain current plans and accounts or establish new plans and accounts. In addition, until further notice, sponsors of prototype IRAs, SEPs, and SIMPLE IRA plans are permitted to amend their documents to reflect recent legislation without affecting that reliance. 

The IRS will not accept applications for an opinion letter from prototype IRA, SEP or SIMPLE IRA plan sponsors, and will return to the applicant any application submitted. Taxpayers who want to use a pre-approved document without using a prototype document may use the following existing model forms, which are available on the IRS website, to maintain current plans and accounts or establish new plans and accounts:

• Form 5305, Traditional Individual Retirement Trust Account
• Form 5305-A, Traditional Individual Retirement Custodial Account
• Form 5305-R, Roth Individual Retirement Trust Account
• Form 5305-RA, Roth Individual Retirement Custodial Account
• Form 5305-RB, Roth Individual Retirement Annuity Endorsement
• Form 5305-S, SIMPLE Individual Retirement Trust Account
• Form 5305-SA, SIMPLE Individual Retirement Custodial Account
• Form 5304-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - Not for Use With a Designated Financial Institution
• Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - for Use With a Designated Financial Institution
• Form 5305-SEP, Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement
• Form 5305A-SEP, Salary Reduction Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement

Why?

The IRS says that the temporary suspension in accepting applications for opinion letters on prototype IRAs, SEPs, and SIMPLE IRA plans will allow it to:

• update the prototype IRA opinion letter program;
• issue revised model forms and Listings of Required Modifications (LRMs); and 
• issue related published guidance to reflect recent legislation, most notably, the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Announcement 2022-06 will appear in Internal Revenue Bulletin 2022-13, which will be issued on March 28, 2022.