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IRS amends & expands pre-approved plan program and extends application date

Rev Proc 2015-36, 2015-25 IRB

In a Revenue Procedure, IRS has issued updated procedures for issuing opinion and advisory letters regarding the acceptability of the form of pre-approved plans under Code Sec. 401, Code Sec. 403(a) and Code Sec. 4975(e)(7) . The changes include an expansion of the scope of the pre-approved program. IRS has also extended the deadline for submitting on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans to Oct. 30, 2015.

Background. Rev Proc 2011-49, 2011-44 IRB 608, as modified, provides procedures for the issuance of opinion and advisory letters by IRS regarding the acceptability of the form of pre-approved plans. Rev Proc 2011-49, Sec. 6.03(4) and Rev Proc 2011-49, Sec. 16.03(4) provided that opinion and advisory letters would not be issued for employee stock ownership plans (ESOPs). Rev Proc 2011-49, Sec. 6.03(6) and Rev Proc 2011-49, Sec. 16.03(6) provided that opinion and advisory letters would not be issued for applicable defined benefit plans within the meaning of Code Sec. 411(a)(13)(C) (Hybrid Plans). Hybrid plans include “cash balance plans.” (T.D. 9693, 09/19/2014)

Rev Proc 2007-44, 2007-2 CB 54 (see Weekly Alert ¶  9  06/21/2007), as modified, describes the cyclical remedial amendment periods for individually designed plans and pre-approved plans (i.e., master and prototype (M&P) or volume submitter (VS) plans). Specifically, each pre-approved plan must be submitted to IRS during the applicable on-cycle submission period for a new opinion and advisory letter regarding the acceptability of its form under Code Sec. 401 and Code Sec. 403(a). Individually-designed qualified plans generally have a 5-year remedial amendment cycle. Pre-approved plans generally have a 6-year remedial amendment cycle. Pre-approved defined contribution plans have a different 6-year cycle than pre-approved defined benefit plans. (Rev Proc 2007-44)

The second 6-year remedial amendment cycle for pre-approved defined benefit plans began on Feb. 1, 2013, and ends on Jan. 31, 2019. Rev Proc 2007-44, Sec. 18.02(2) provides that the 9-month applicable on-cycle submission period for sponsors and volume submitter (VS) practitioners maintaining defined benefit mass submitter plans ended on Oct. 31, 2013, and for sponsors and VS practitioners maintaining non-mass submitter plans ended on Jan. 31, 2014. Several announcements, the last of which was Ann. 2014-41, 2014-52 IRB 979 (Weekly Alert ¶  3  12/11/2014), extended the end of this period to June 30, 2015. Therefore, the 12-month on-cycle submission period for both mass and non-mass submitter sponsors and VS practitioners, word-for-word identical adopters, and M&P minor modifier placeholder applications was scheduled to end on June 30, 2015.

IRS amends procedures & expands program. Rev Proc 2015-36 sets forth amended procedures for IRS issuing opinion and advisory letters regarding the acceptability under Code Sec. 401, Code Sec. 403(a) and Code Sec. 4975(e)(7) of the form of pre-approved plans (that is, M&P and VS plans).

The principal changes expand the program to:

…allow sponsors to request opinion letters for ESOPs. Provisions also set forth the specific areas for which opinion letters will not be issued for ESOPs;
…allow VS practitioners to request advisory letters for ESOPs. Provisions also set forth specific areas for which advisory letters will not be issued for ESOPs;
…allow sponsors to submit cash balance plans to IRS and request opinion letters for plans containing these features. Provisions also set forth specific areas for which opinion letters will not be issued for cash balance plans; and
…allow VS practitioners to submit cash balance plans to IRS and request advisory letters for plans containing these features. Provisions also set forth specific areas for which advisory letters will not be issued for cash balance plans.

Rev Proc 2015-36 modifies and supersedes Rev Proc 2011-49.

IRS also further extends the deadline for defined benefit plans. Rev Proc 2015-36 also extends to Oct. 30, 2015 the deadline for submitting on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans for the plans’ second six-year remedial amendment cycle. The extension to Oct. 30, 2015, applies to pre-approved defined benefit mass submitter lead and specimen plans, word-for-word identical plans, M&P minor modifier placeholder applications, and defined benefit non-mass submitter plans.

Plans submitted in accordance with this extension will continue to be reviewed for qualification items based on the 2012 Cumulative List (Notice 2012-76, 2012-52 IRB 775), i.e., the Cumulative List applicable to sponsors of defined benefit pre-approved plans submitting during the second 6-year remedial amendment cycle.

Effective date. Rev Proc 2015-36 is effective June 8, 2015.

References: For pre-approval of master and prototype and volume submitter plans in IRS opinion and advisory letters, see FTC 2d/FIN ¶  T-10630  et seq.; TG ¶  8123  . For pre-approval of Code Sec. 403(b) plans in IRS opinion and advisory letters, see FTC 2d/FIN ¶  T-10720  et seq. For the remedial amendment cycle, see FTC 2d/FIN ¶  H-8761  et seq.; United States Tax Reporter ¶  4014.08  ; TaxDesk ¶  286,037  et seq.