Changes to Qualified Plan Determination Letter Program

The Internal Revenue Service (IRS) has made changes to the determination letter process for individually designed qualified retirement plans. For qualified plans currently in existence, several changes will occur beginning January 1, 2017. The 2017 changes will eliminate the 5 year remedial amendment cycle for individually designed plans and the accompanying determination letter process. Although the IRS will still accept determination letters for initial plan qualification and in other limited contexts, the 5-year amendment cycle and accompany determination letter process will largely be eliminated in 2017. The IRS has requested comments from practitioners on additional regulatory and other guidance needed to assist plan sponsors as a result of the changes announced by the IRS.

In addition, the availability of “off-cycle” determination letters has also been eliminated effective immediately. A plan’s determination letter application is filed off-cycle if it is submitted anytime other than during the last 12-month period of the plan’s remedial amendment cycle. Except for initial plan qualification determination letters, the IRS will no longer issue determination letters outside the parameters of the 5 year retroactive compliance cycle.

The IRS cites the need for more efficient use of resources in the eventual elimination of the 5 year retroactive amendment cycle determination letter process, and the immediate elimination of the off-cycle letters.

The IRS announcement may be found at the following link: http://www.irs.gov/pub/irs-drop/a-15-19.pdf

© 2015 Houghton Vandenack Williams
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