According to Employee Plans News, June 8, 2012, the Internal Revenue Service (the “IRS”) held the Employee Plans Determination Letter Program Update phone forum on March 30. At the phone forum, the IRS identified the following two changes to the determination letter program:
First, as of May 1, we only accept Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans, from volume submitter plan adopters that deviate from their pre-approved specimen document. Second, as of February 1 for plans with a 5-year remedial amendment cycle (other than terminating plans), and May 1 for terminating plans and plans with a 6-year remedial amendment cycle, we no longer accept accompanying Schedule Q or demonstrations as part of a determination letter application.
As to the second change, the IRS noted that a plan’s allocation or benefit formula can often be quite complex. Demonstrations present information illustrating how benefits meet various qualification requirements, especially showing that the plan’s formula is definite or predetermined. Although not having demos in the future will speed our work, without having this information, our analysis will be more difficult, and we may have some additional questions for the plan sponsor about how benefits are determined.