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.
Author: Kristina Zinnen
