IRS Webpage: IRS Checklists for Retirement Plan Documents
The IRS has updated nearly all of the “subject matter packages” used by IRS specialists when reviewing retirement plan documents. Each package consists of an Explanation, a Worksheet, and a Checksheet that are designed to be used together. The Explanations are considered IRS publications, and the Worksheets and Checksheets are IRS forms. In general, the Explanations describe the applicable legal requirements and provide citations to the Code and regulations; the Worksheets consist of yes-or-no questions (with a “no” answer normally signaling a potential problem); and the Checksheets provide lists of required plan provisions. While they were created for IRS personnel, these materials can also be used by plan sponsors to review a plan’s compliance before submitting a determination letter application.
The IRS webpage for these materials links to 17 subject matter packages. All but one of the packages show a revision date of June 2021 and are marked as being for applications submitted to conform to the IRS’s 2020 Required Amendments List (see our Checkpoint article). (The outlier is the package regarding affiliated service groups, which was last revised in April 2016.) A few of the packages relate only to defined benefit plans, but the majority are relevant to 401(k) plans and other defined contribution plans. One package covers topics that relate exclusively to 401(k) plans, while others cover employee and matching contributions, contribution and benefit limits, minimum participation and vesting standards, coverage and nondiscrimination requirements, required distributions, joint and survivor annuities, and top-heavy requirements. Topics covered by the 401(k) plans package include 401(k)-specific rules regarding contributions, coverage and participation, vesting, nondiscrimination, qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs), distributions and corrections, highly compensated employee and compensation definitions, safe harbor provisions, qualified automatic contribution arrangements (QACAs), and eligible automatic contribution arrangements (EACAs). The package on employee and matching contributions covers nondiscrimination testing, the types of contributions provided under the plan, corrections, plan definitions of highly compensated employees and compensation, safe harbor contributions, and QACAs.
EBIA Comment: Use of the subject matter packages is not required of plans, and the Worksheets and Checksheets are not submitted as part of the determination letter application process. But plan sponsors, TPAs, and others will likely find them to be a helpful resource, not only in preparing determination letter applications but also in performing voluntary compliance audits. For more information, see EBIA’s 401(k) Plans manual at Sections XXVII (“Plan Administration: Adoption, Amendment, Submission”) and XXXII.D (“Voluntary Compliance Audits”).
Contributing Editors: EBIA Staff.