IRS Provides Advance Notice of 2021 User Fee Increases for Certain Letter Rulings and Determination Letters

The IRS has announced that user fees will increase as of January 4, 2021, for certain requests for letter rulings and determination letters for employee benefit plans, including 401(k) plans. User fees are routinely announced in the IRS’s annual updates to its revenue procedures governing letter rulings, determination letters, and other advice to taxpayers (for the 2020 revenue procedures, see our Checkpoint article). But for 2021, the IRS is providing advance notice of several increased fees affecting employee plans. The full user fee schedule for rulings and determinations under the jurisdiction of the IRS’s Employee Plans Rulings and Agreements Office (including these increased fees) will appear in Revenue Procedure 2021-4, to be published in Internal Revenue Bulletin 2021-1 on January 4, 2021.

The announcement highlights four fee increases. Fees for requests filed on Form 5300 (Application for Determination for Employee Benefit Plan) and Form 5307 (Application for Determination for Adopters of Modified Volume Submitter Plans) will both increase by $200—from $2,500 to $2,700 for Form 5300, and from $800 to $1,000 for Form 5307. The fee for requests filed on Form 5310 (Application for Determination for Terminating Plan) will increase from $3,000 to $3,500. The most significant increase announced—$5,500—applies to requests by multiemployer pension plans to extend their unfunded liability amortization period.

EBIA Comment: Advance notice of these fee changes is helpful, particularly for those who expect to submit affected requests shortly after the new fees go into effect. But fee increases are just one element of the constantly evolving letter ruling and determination letter process. Those who work with 401(k) plans should carefully review the annual updates, when issued, for other changes. For more information, see EBIA’s 401(k) Plans manual at Sections III.C.4 (“IRS Rulings and Other Guidance”), XXVII.J (“Determination Letter Forms, Fees, and Notice”), and XXVII.L (“Pre-Approved Plan: Opinion Letter Program”).

Contributing Editors: EBIA Staff.