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IRS extends deadline to submit letter applications for certain defined benefit plans

January 24, 2014

IRS has announced that the deadline to submit on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans, for the plans’ second six-year remedial amendment cycle, has been extended from Jan. 31, 2014 to Feb. 2, 2015. This extension applies to defined benefit mass submitter lead and specimen plans, word-for-word identical plans, master and prototype minor modifier placeholder applications, and non-mass submitter defined benefit plans.

Background. Rev Proc 2007-44, 2007-2 CB 54 (see Weekly Alert ¶  9  06/21/2007) 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 five-year remedial amendment cycle. Pre-approved plans generally have a six-year remedial amendment cycle. Pre-approved defined contribution plans have a different six-year cycle than pre-approved defined benefit plans. (Rev Proc 2007-44, 2007-2 CB 54)

In Ann. 2013-37, 2013-34 IRB 155, IRS extended to Jan. 31, 2014, the deadline to submit on-cycle applications for opinion and advisory letters for sponsors and practitioners maintaining defined benefit mass submitter lead plans for the plans’ second six-year remedial amendment cycle (see Weekly Alert ¶  20  08/01/2013).

Deadline extended. In Ann. 2014-4, IRS has extended to Feb. 2, 2015 the deadline to submit on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans for the plans’ second six-year remedial amendment cycle. IRS intends to expand the pre-approved program to allow plans with certain cash balance features to be submitted by sponsors and practitioners as part of their pre-approved defined benefit submissions. The submission deadline is extended to allow time for IRS to develop the necessary language and tools to do so. IRS asks for comments on this expansion, including program parameters and proposals for sample plan language.

While the extension was made in response to requests from the employee benefits community that IRS develop such a pre-approved plan program for defined benefit plans with cash balance features (to be available for the second six-year remedial amendment cycle), the extension applies to all on-cycle pre-approved defined benefit plan submissions, even those that will not be modified to contain cash balance features. IRS will announce in future guidance when applications for opinion and advisory letters for pre-approved defined benefit plans with cash balance features may be submitted. Until that time, such plans should not be submitted under the pre-approved program.

In general, IRS indicated that 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 six-year remedial amendment cycle.

The user fees under Rev Proc 2013-8, 2013-1 IRB 237, will apply to pre-approved defined benefit plan applications submitted by Jan. 31, 2014, which are not intended to contain cash balance features.

Individually designed plans. In order to preserve (or, in the case of a new plan, obtain) reliance on the terms of their plans, sponsors of individually designed plans who intend to adopt a pre-approved defined benefit plan document in the future may, before the end of their applicable individually designed on-cycle deadline, complete Form 8905, Certification of Intent to Adopt a Pre-approved Plan, in lieu of submitting an application for an individually designed determination letter. Sponsors of individually designed Cycle C plans (which have their remedial amendment cycle ending on Jan. 31, 2014) that do not intend to file a determination letter as an individually designed plan, but intend to adopt a pre-approved defined benefit plan document, have until Mar. 31, 2014 (instead of Jan. 31, 2014) to complete Form 8905.