IRS Updates Determination Letter Procedures for Qualified Plans (Rev. Proc. 2016-37)

CCH Tax Day Report

The IRS has modified its procedures for the determination letter program for qualified plans to eliminate the five-year remedial amendment cycle system for individually designed plans, effective January 1, 2017. The new revenue procedure clarifies, modifies and supersedes Rev. Proc. 2007-44, 2007-2 CB 54, and it modifies Rev. Proc. 2015-36, I.R.B. 2015-27, 20, and Notice 2015-84, I.R.B. 2015-52, 880.

Effective January 1, 2017, a sponsor of an individually designed plan will be permitted to submit a determination letter application only for initial plan qualification, for qualification upon plan termination, and in certain other circumstances.

Also effective January 1, 2017, the interim amendment requirement will no longer apply to individually designed plans. For disqualifying provisions that arise as a result of a change in qualification requirements, the IRS intends to publish annually a Required Amendments List, which will establish the deadline for a plan to be amended. The deadline will be, unless otherwise provided, the end of the second calendar year following the year in which the list is issued. In general, a change to the qualification requirements will not appear on a Required Amendments List until guidance with respect to such change (including model amendments, if any) has been provided in regulations or in other guidance published in the Internal Revenue Bulletin. The first Required Amendments List generally will apply to changes in qualification requirements first effective during the 2016 calendar year.

The new procedure extends the remedial amendment period for individually designed plans to correct disqualifying provisions (i) that are in new plans, (ii) that arise as a result of amendments made to existing plans, and (iii) that arise as a result of a change in qualification requirements.

The new revenue procedure describes and makes clarifying changes to the six-year remedial amendment cycle system for pre-approved qualified plans and modifies the six-year remedial amendment cycle system, as applicable, to reflect changes that have been made to the determination letter program for individually designed plans. In addition, the new procedure delays until August 1, 2017, the beginning of the 12-month submission period for master and prototype (M&P) plan sponsors and volume submitter (VS) practitioners to submit pre-approved defined contribution plans for opinion or advisory letters during the third six-year remedial amendment cycle.

The beginning of the 12-month submission period for M&P sponsors and VS practitioners to submit pre-approved defined contribution plans for opinion or advisory letters during the third six-year remedial amendment cycle is delayed until August 1, 2017.

Rev. Proc. 2016-37, 2016FED ¶46,361

Other References:

Code Sec. 401

CCH Reference – 2016FED ¶17,507.15

CCH Reference – 2016FED ¶17,507.2543

CCH Reference – 2016FED ¶17,507.2546

Code Sec. 403

CCH Reference – 2016FED ¶18,282.11

Code Sec. 409

CCH Reference – 2016FED ¶18,951.27

Code Sec. 411

CCH Reference – 2016FED ¶19,076.954

Code Sec. 412

CCH Reference – 2016FED ¶19,125.60

Code Sec. 501

CCH Reference – 2016FED ¶22,604.10

CCH Reference – 2016FED ¶22,660.10

CCH Reference – 2016FED ¶22,683.87

Code Sec. 503

CCH Reference – 2016FED ¶22,683.87

Code Sec. 509

CCH Reference – 2016FED ¶22,812.50

Statement of Procedural Rules Sec. 601

CCH Reference – 2016FED ¶43,360.173

CCH Reference – 2016FED ¶43,360.205

CCH Reference – 2016FED ¶43,360.2112

CCH Reference – 2016FED ¶43,360.2113

CCH Reference – 2016FED ¶43,360.2116

CCH Reference – 2016FED ¶43,360.212

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CCH Reference – TRC RETIRE: 51,052.20 CCH Reference – TRC RETIRE: 51,102.05

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