In Announcement 2015-19, the Internal Revenue Service (the “IRS”) describes important changes to the Employee Plans determination letter program for qualified retirement plans. Here is what the Announcement says.
Effective January 1, 2017, the IRS will eliminate the staggered 5-year determination letter remedial amendment cycles for individually designed plans. The IRS will limit the scope of the determination letter program for individually designed plans to initial plan qualification and qualification upon plan termination, and to certain other limited circumstances that will be determined by Treasury and the IRS.
As of January 1, 2017, the IRS will no longer accept determination letter applications based on the 5-year remedial amendment cycles. However, sponsors of Cycle A plans, described in section 9.03 of Rev. Proc. 2007-44, will continue to be permitted to submit determination letter applications during the period beginning February 1, 2016, and ending January 31, 2017.
Section 5.03 of Rev. Proc. 2007-44 extends the remedial amendment period for disqualifying provisions described in section 5.03(1) and (2) to the end of a plan’s applicable remedial amendment cycle. 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 will not be available after December 31, 2016, and the remedial amendment period definition in § 1.401(b)-1 will apply. However, the Commissioner intends to extend the remedial amendment period for individually designed plans to a date that is expected to end no earlier than December 31, 2017.
The IRS is requesting comments on specific issues relating to the implementation of these changes to the determination letter program, and as to the situations in which an application for a determination letter will be accepted. The foregoing changes will be reflected in an update to Rev. Proc. 2007-44, and in a successor to Rev. Proc. 2015-6.
In addition, the IRS will no longer accept determination letter applications that are submitted off-cycle, except in limited circumstances. In connection with the modifications to the determination letter program described in this Announcement, the Treasury Department and the IRS are considering ways to make it easier for plan sponsors to comply with the qualified plan document require