Time Grows Short for Hybrid Plans to Submit Amended Determination Letter Requests

Time is running out for statutory plans to submit determination letter requests under a program the IRS announced and launched in 2019. Amended individually designed statutory hybrid plans have until Aug. 31, 2020 to submit determination letter applications.  

 

The IRS on May 1, 2019 issued Revenue Procedure (Rev. Proc.) 2019-20, which opened the determination letter program for those plans to submit determination letter applications during the 12-month period beginning Sept. 1, 2019 and ending on Aug. 31, 2020.  

 

Applications submitted by Aug. 31, 2020 need to contain the following, at a minimum: 

 

Form 5300,  Application for Determination of Employee Benefit Plan;
Form 8717, User Fee for Employee Plan Determination Letter Request, with appropriate user fee; and
Form 8821, Tax Information Authorization, or Power of Attorney, if applicable. 

 

The IRS adds that an applicant is to indicate in the cover letter that the application is made under Rev. Proc. 2019-20. In addition, in the cover letter, an applicant should provide an address or fax number to which the IRS will send an Application Identification Sheet for additional documents and information. To ensure that separate submissions are maintained in the same case file, applicants are to include the Application Identification Sheet with any further submissions so that any documents or information sent after the initial submission can be associated with the initial determination letter application.

 

 

The IRS said in the Aug. 24, 2020 edition of Employee Plans News that some practitioners and plan sponsors reported that they found it difficult to obtain the documents and information necessary to file a complete submission by Aug. 31, 2020. Consequently, the IRS says that applicants that submit applications by that date, but that are incomplete, may supplement those applications through the end of 2020.

 

 

Also under Rev. Proc. 2019-20, any remedial amendment period that is open as of Sept. 1, 2019 was extended to Aug. 31, 2020 as well. Treas. Reg. §1.401(b)-1(e)(3), which provides that the submission of a determination letter application extends the remedial amendment period until the expiration of 91 days after the date a determination letter is issued, continues to apply.

 

 

The IRS also began accepting determination letter applications concerning plan mergers beginning Sept. 1, 2020. But unlike the acceptance of such letters for statutory hybrid plans, the IRS will continue to accept determination letter applications concerning plan mergers after Aug. 31, 2020.