IRS Announces End to Five-Year Determination Letter Cycle
On August 10, 2015, the IRS announced changes to the Employee Plans determination letter program.
Section 401(b) of the Internal Revenue Code (Code) provides a remedial amendment period during which a plan may be amended retroactively to comply with the Code’s qualification requirements. Under IRS procedures, sponsors of individually designed plans generally are permitted to apply for determination letters once every 5 years. Effective January 1, 2017, the IRS will eliminate the staggered five-year determination letter remedial amendment cycle.
With some exceptions that will be defined in the regulations, plans will submit a determination letter application only upon initial plan qualification and upon plan termination. Plans filing in Cycle E still need to file by January 31, 2016. Off-cycle determination letter applications are immediately eliminated.
The IRS is requesting comment on changes it should make to the remedial amendment period, interim amendment requirements, converting individually-designed plans into pre-approved plans, and revisions to the Employee Plans Compliance Resolution System.
For more information on the IRS changes to the determination letter program, please contact your Trust Fund counsel.
By Kristina Zinnen | September 24, 2015