IRS Updates Procedures for Determination Letter Requests

The IRS has updated the procedures for determination letter requests. The new procedures are outlined in Revenue Procedure (Rev. Proc.) 2021-04.

Rev. Proc. 2021-04 is a general update of Rev. Proc. 2020-4, https://www.irs.gov/irb/2020-01_IRB#REV-PROC-2020-4 which sets forth:

• general information about the types of advice provided by the IRS Employee Plans Office of Rulings and Agreements; 
• general procedures for letter ruling and determination letter requests; 
• specific procedures for determination letter requests; and 
• user fees associated with advice requested from Employee Plans Rulings and Agreements.

Rev. Proc. 2021-04 explains how the IRS provides advice to taxpayers on issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, Employee Plans Rulings and Agreements Office (Employee Plans Rulings and Agreements). It also details the types of advice available to taxpayers, and the manner in which such advice is requested and provided.

Changes made to Revenue Procedure 2020-04

Substantive changes that Rev. Proc. 2021-04 makes to Rev. Proc. 2020-4 include the following. 

Sections 6.02 and 30.07 are revised to provide that Form 5310 may be submitted electronically beginning on April 16, 2021, and must be submitted electronically beginning on Aug. 1, 2021, and to describe the procedures for submitting Form 5310, including payment of the user fee.

Sections 8.02(4) and 8.04 are modified to delete language that provided that the IRS would accept determination letter applications for statutory hybrid plans, which were eligible to submit for a determination letter only from Sept. 1, 2019, to Aug. 31, 2020. 

Section 8 is modified to delete the category of adopting employers that can submit determination letters under Rev. Proc. 2015-36 regarding cycles before the third six-year remedial amendment cycle, since the deadline for adopting employers to submit determination letters regarding the second six-year remedial amendment cycle has expired. 

Section 9.08 is modified to provide that, in order to request a determination on leased employees, taxpayers should attach a cover letter to Form 5300 in addition to the information contained in section 17. 

Section 10.06(1) is modified to provide that if a submitted plan is the result of a merger of two or more plans, the applicant must include a copy of the prior determination letter for each of the plans and a copy of the prior plan document or, if applicable, the adoption agreement and the opinion or advisory letter for each of the plans, and to describe the amendments that must be included with the application. 

Section 12A, describing determination letter application procedures for adopting employers of pre-approved plans regarding cycles before the third six-year remedial amendment cycle, is deleted because the deadline for submitting a determination letter with respect to such cycles has expired. Section 12B is redesignated as Section 12. 

Section 12.01 (formerly Section 12B.01) is modified to provide that the adoption period for defined benefit pre-approved plans with respect to the third six-year remedial amendment cycle will not occur in 2021. 

Sections 12.02 through 12.04 (formerly Sections 12B.02 through 12B.04) are modified to add a category for a determination request with respect to a governmental pension plan that does not satisfy any of the safe harbors described in Treas. Reg. §1.401(a)-1(b)(2) of and requests reliance, including:

• the conditions under which such a request may be submitted;
• the applicable form; and 
• the scope of review. 

Section 12.03(1) (formerly section 12B.03(1)) is clarified to specify that the controlling member of a multiple employer plan is the adopting employer sponsoring a plan that submits the application as the lead employer of the multiple employer plan. 

Section 13.03 is modified to provide additional information for applications with respect to ESOPs submitted on Form 5307.  

Section 14 is clarified to provide that a determination letter applicant for a multiple employer plan that is otherwise eligible to apply for a determination letter must request a letter for the plan in the name of the adopting employer sponsoring a plan that submits the application as the lead employer of the multiple employer plan (controlling member). 

Sections 16.01 and 16.02 are revised to add a reference to section 336(e) of the PATH Act. 

Section 30.11, regarding a request for reconsideration of user fee, is revised to provide that certain requests must be submitted to the Area Manager, EP Determinations. 

Section 31.03 is revised to clarify that EP Determinations accepts requests for M&P word-for-word opinion letters and VS word-for-word advisory letters regarding pre-approved DB plans for the second six-year remedial amendment cycle.  

Appendix A, Sections .01 and .06 are revised to update user fees, as set forth in Announcement 2020-14. 

Appendix A, Section .05 is modified to add two additional categories of opinion letters (carried over from the second six-year remedial amendment cycle to the third (and subsequent) six-year remedial amendment cycles) regarding:

• an assumption of sponsorship of a pre-approved plan without any amendment to the plan document; and
• a change of name or address of a pre-approved plan provider.

User Fees

Increased user fees are effective Jan. 4, 2021 for the following types of letter ruling and determination letter requests currently listed in Appendix A of Rev. Proc. 2020-4: 

 

Section	Type of User Fee	Current User Fee (Rev. Proc. 2020- 4)	User Fee Effective Jan. 4, 2021 (Rev. Proc. 2021- 4)
Section .01(3)	Letter ruling request for Five-Year Automatic Extension of the Amortization Period	$1,000	$6,500
Section .06(1)(a)	Form 5300 (Application for Determination for Employee Benefit Plan)	$2,500	$2,700
Section .06(1)(b)	Form 5307 (Application for Determination for Adopters of Modified Volume Submitter Plans)	$800	$1,000
Section .06(1)(c)	Form 5310 (Application for Determination for Terminating Plan)	$3,000	$3,500

 

Revenue Procedure Available

Rev. Proc. 2021-04 begins at page 157 of the Internal Revenue Bulletin of Jan. 4, 2021.